Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Feb. 08, 2023 | Jun. 30, 2022 | |
Document Type | 10-K | ||
Amendment Flag | false | ||
Icfr Auditor Attestation Flag | true | ||
Document Period End Date | Dec. 31, 2022 | ||
Document Fiscal Year Focus | 2022 | ||
Document Fiscal Period Focus | FY | ||
Trading Symbol | CFLT | ||
Entity Registrant Name | CONFLUENT, INC. | ||
Entity Central Index Key | 0001699838 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Document Annual Report | true | ||
Entity voluntary filers | No | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Emerging Growth Company | false | ||
Entity Small Business | false | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Shell Company | false | ||
Title of 12(b) Security | Class A Common Stock, par value $0.00001 per share | ||
Entity File Number | 001-40526 | ||
Security Exchange Name | NASDAQ | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 47-1824387 | ||
Entity Address, Address Line One | 899 W. Evelyn Avenue | ||
Entity Address, City or Town | Mountain View | ||
Entity Address, State or Province | CA | ||
Entity Address, Postal Zip Code | 94041 | ||
City Area Code | 800 | ||
Local Phone Number | 439-3207 | ||
Document Transition Report | false | ||
Documents Incorporated by Reference | DOCUMENTS INCORPORATED BY REFERENCE Portions of the Registrant’s definitive Proxy Statement relating to the 2023 Annual Meeting of Stockholders are incorporated herein by reference in Part III of this Annual Report on Form 10-K to the extent stated herein. Such Proxy Statement will be filed with the Securities and Exchange Commission within 120 days of the Registrant’s fiscal year ended December 31, 2022 . | ||
Entity Public Float | $ 3,222.9 | ||
Auditor Name | PricewaterhouseCoopers LLP | ||
Auditor Location | San Francisco, California | ||
Auditor Firm ID | 238 | ||
Class A Common Stock [Member] | |||
Entity Common Stock, Shares Outstanding | 177,250,222 | ||
Class B Common Stock [Member] | |||
Entity Common Stock, Shares Outstanding | 113,879,311 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 435,781 | $ 1,375,932 |
Marketable securities | 1,491,044 | 640,085 |
Accounts receivable, net | 178,188 | 137,491 |
Deferred contract acquisition costs | 35,883 | 27,646 |
Prepaid expenses and other current assets | 57,229 | 44,919 |
Total current assets | 2,198,125 | 2,226,073 |
Property and equipment, net | 29,089 | 14,428 |
Operating lease right-of-use assets | 29,478 | 37,281 |
Deferred contract acquisition costs, non-current | 68,401 | 51,178 |
Other assets, non-current | 19,756 | 13,769 |
Total assets | 2,344,849 | 2,342,729 |
Current liabilities: | ||
Accounts payable | 21,439 | 7,591 |
Accrued expenses and other liabilities | 102,755 | 98,974 |
Operating lease liabilities | 7,375 | 9,236 |
Deferred revenue | 290,185 | 220,920 |
Liability for early exercise of unvested stock options | 2,576 | 11,467 |
Total current liabilities | 424,330 | 348,188 |
Operating lease liabilities, non-current | 25,136 | 31,645 |
Deferred revenue, non-current | 32,644 | 25,557 |
Convertible senior notes, net | 1,084,500 | 1,080,701 |
Other liabilities, non-current | 8,762 | 6,357 |
Total liabilities | 1,575,372 | 1,492,448 |
Commitments and contingencies (Note 8) | ||
Stockholders' equity (deficit): | ||
Preferred stock, par value of $0.00001per share 1,000,000,000 shares authorized as of December 31, 2022 and December 31,2021; 0 shares issued and outstanding as of December 31, 2022 and December 31, 2021 | 0 | 0 |
Additional paid-in capital | 1,980,335 | 1,599,962 |
Accumulated other comprehensive loss | (9,456) | (830) |
Accumulated deficit | (1,201,405) | (748,854) |
Total stockholder's equity | 769,477 | 850,281 |
Total liabilities and stockholder's equity | 2,344,849 | 2,342,729 |
Class A Common Stock [Member] | ||
Stockholders' equity (deficit): | ||
Common Stock, Value | 2 | 1 |
Class B Common Stock [Member] | ||
Stockholders' equity (deficit): | ||
Common Stock, Value | $ 1 | $ 2 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2022 | Dec. 31, 2021 |
Preferred Stock, Par Value | $ 0.00001 | $ 0.00001 |
Preferred Stock, Shares Authorized | 10,000,000 | 10,000,000 |
Preferred Stock, Shares Issued | 0 | 0 |
Preferred Stock, Shares Outstanding | 0 | 0 |
Class A Common Stock [Member] | ||
Common Stock, Par Value | $ 0.00001 | $ 0.00001 |
Common Stock, Shares Authorized | 1,000,000,000 | 1,000,000,000 |
Common Stock, Shares, Issued | 172,483,134 | 116,728,968 |
Common Stock, Shares, Outstanding | 172,483,134 | 116,728,968 |
Class B Common Stock [Member] | ||
Common Stock, Par Value | $ 0.00001 | $ 0.00001 |
Common Stock, Shares Authorized | 500,000,000 | 500,000,000 |
Common Stock, Shares, Issued | 116,901,046 | 155,072,914 |
Common Stock, Shares, Outstanding | 116,901,046 | 155,072,914 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Revenue: | |||
Total revenue | $ 585,944 | $ 387,864 | $ 236,577 |
Cost of revenue: | |||
Total cost of revenue | 202,415 | 137,292 | 75,476 |
Gross profit | 383,529 | 250,572 | 161,101 |
Operating expenses: | |||
Research and development | 264,041 | 161,925 | 105,399 |
Sales and marketing | 456,452 | 319,331 | 166,361 |
General and administrative | 125,710 | 108,936 | 122,516 |
Total operating expenses | 846,203 | 590,192 | 394,276 |
Operating loss | (462,674) | (339,620) | (233,175) |
Other income (expense), net | 16,416 | (7) | 3,140 |
Loss before income taxes | (446,258) | (339,627) | (230,035) |
Provision for (benefit from) income taxes | 6,293 | 3,174 | (207) |
Net loss | $ (452,551) | $ (342,801) | $ (229,828) |
Net loss per share, basic | $ (1.62) | $ (1.82) | $ (2.21) |
Net loss per share, diluted | $ (1.62) | $ (1.82) | $ (2.21) |
Weighted-average shares used to compute net loss per share, basic | 280,080,357 | 188,627,720 | 104,218,082 |
Weighted-average shares used to compute net loss per share, diluted | 280,080,357 | 188,627,720 | 104,218,082 |
Subscription [Member] | |||
Revenue: | |||
Total revenue | $ 535,009 | $ 347,099 | $ 208,633 |
Cost of revenue: | |||
Total cost of revenue | 146,324 | 94,860 | 49,283 |
Services [Member] | |||
Revenue: | |||
Total revenue | 50,935 | 40,765 | 27,944 |
Cost of revenue: | |||
Total cost of revenue | $ 56,091 | $ 42,432 | $ 26,193 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Statement of Comprehensive Income [Abstract] | |||
Net loss | $ (452,551) | $ (342,801) | $ (229,828) |
Other comprehensive (loss) income, net of tax: | |||
Net unrealized (loss) gain on marketable securities | (9,279) | (1,058) | 31 |
Net unrealized gain on derivative instruments | 653 | 0 | 0 |
Other comprehensive (loss) income, net of tax | (8,626) | (1,058) | 31 |
Total comprehensive loss | $ (461,177) | $ (343,859) | $ (229,797) |
Consolidated Statements of Rede
Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders' Equity (Deficit) - USD ($) $ in Thousands | Total | Redeemable Convertible Preferred Stock [Member] | Convertible Founder Stock [Member] | Common Stock [Member] | Common Stock Class A and Class B [Member] | Additional Paid-In Capital [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Accumulated Deficit [Member] |
Balance at Dec. 31, 2019 | $ 205,784 | |||||||
Balance (shares) at Dec. 31, 2019 | 90,624,091 | |||||||
Balance at Dec. 31, 2019 | $ (130,765) | $ 1 | $ 45,262 | $ 197 | $ (176,225) | |||
Balance (shares) at Dec. 31, 2019 | 7,920,000 | 98,636,479 | ||||||
Issuance of common stock upon early exercise of unvested options, net of repurchases (shares) | 1,400,335 | |||||||
Vesting of early exercised options | 7,030 | 7,030 | ||||||
Issuance of common stock upon exercise of vested options | 12,430 | 12,430 | ||||||
Issuance of common stock upon exercise of vested options (shares) | 9,411,029 | |||||||
Stock-based compensation | 143,888 | 143,888 | ||||||
Redeemable convertible preferred stock, Par Value | $ 259,815 | |||||||
Issuance of Series E redeemable convertible preferred stock, net of issuance costs (shares) | 17,369,577 | |||||||
Issuance of Class A common stock pursuant to charitable donation | 0 | |||||||
Conversion of convertible founder stock for Series E redeemable convertible preferred stock (shares) | 7,284,182 | (7,284,182) | ||||||
Conversion of convertible founder stock for Series E redeemable convertible preferred stock | (109,035) | $ 109,035 | (109,035) | |||||
Other comprehensive income, net of tax | 31 | 31 | ||||||
Net loss | (229,828) | $ (10,268) | (229,828) | |||||
Balance at Dec. 31, 2020 | (306,249) | $ 1 | 99,575 | 228 | (406,053) | |||
Balance (shares) at Dec. 31, 2020 | 115,277,850 | |||||||
Balance at Dec. 31, 2020 | $ 574,634 | |||||||
Balance (shares) at Dec. 31, 2020 | 635,818 | 109,447,843 | ||||||
Issuance of common stock upon early exercise of unvested options, net of repurchases (shares) | 2,447,573 | 1,104 | ||||||
Vesting of early exercised options | 10,235 | 10,235 | ||||||
Issuance of common stock upon exercise of vested options | 51,793 | $ 1 | 51,792 | |||||
Issuance of common stock upon exercise of vested options (shares) | 7,072,147 | 13,021,053 | ||||||
Vesting of restricted stock (shares) | 648,494 | |||||||
Stock-based compensation | 158,249 | 158,249 | ||||||
Reclassification of common stock to Class B common stock upon initial public offering | $ (1) | $ 1 | ||||||
Reclassification of common stock to Class B common stock upon initial public offering, Shares | (118,967,563) | 118,967,563 | ||||||
Conversion of redeemable convertible preferred and founder stock to Class B common stock upon initial public offering (shares) | (115,277,850) | |||||||
Conversion of redeemable convertible preferred and founder stock to Class B common stock upon initial public offering | 574,634 | $ 1 | 574,633 | |||||
Conversion of redeemable convertible preferred and founder stock to Class B common stock upon initial public offering | $ (574,634) | |||||||
Conversion of redeemable convertible preferred and founder stock to Class B common stock upon initial public offering (shares) | (635,818) | 115,913,668 | ||||||
Issuance of Class A common stock upon initial public offering, net of underwriting discounts and commissions and other issuance costs | 783,158 | 783,158 | ||||||
Issuance of Class A common stock upon initial public offering, net of underwriting discounts and commissions and other issuance costs (shares) | 23,000,000 | |||||||
Issuance of Class A common stock pursuant to charitable donation | 13,290 | 13,290 | ||||||
Issuance of Class A common stock pursuant to charitable donation (shares) | 250,000 | |||||||
Purchase of Capped Calls | (90,970) | (90,970) | ||||||
Conversion of convertible founder stock for Series E redeemable convertible preferred stock | 0 | |||||||
Other comprehensive income, net of tax | (1,058) | (1,058) | ||||||
Net loss | (342,801) | (342,801) | ||||||
Balance at Dec. 31, 2021 | 850,281 | $ 3 | 1,599,962 | (830) | (748,854) | |||
Balance (shares) at Dec. 31, 2021 | 271,801,882 | |||||||
Issuance of common stock upon early exercise of unvested options (shares) | 59,185 | |||||||
Repurchases of unvested options (shares) | (157,672) | |||||||
Vesting of early exercised options | 11,467 | 11,467 | ||||||
Issuance of common stock upon exercise of vested options | $ 42,767 | 42,767 | ||||||
Issuance of common stock upon exercise of vested options (shares) | 12,198,241 | 12,139,056 | ||||||
Vesting of restricted stock (shares) | 4,155,049 | |||||||
Stock-based compensation | $ 285,200 | 285,200 | ||||||
Issuance of Class A common stock pursuant to charitable donation | 0 | |||||||
Conversion of convertible founder stock for Series E redeemable convertible preferred stock | 0 | |||||||
Issuance of common stock under employee stock purchase plan | 40,939 | 40,939 | ||||||
Issuance of common stock under employee stock purchase plan (shares) | 1,386,680 | |||||||
Other comprehensive income, net of tax | (8,626) | (8,626) | ||||||
Net loss | (452,551) | (452,551) | ||||||
Balance at Dec. 31, 2022 | $ 769,477 | $ 3 | $ 1,980,335 | $ (9,456) | $ (1,201,405) | |||
Balance (shares) at Dec. 31, 2022 | 289,384,180 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
CASH FLOWS FROM OPERATING ACTIVITIES | |||
Net loss | $ (452,551) | $ (342,801) | $ (229,828) |
Adjustments to reconcile net loss to cash used in operating activities: | |||
Depreciation and amortization | 7,620 | 3,632 | 1,567 |
Net (accretion) amortization of (discounts) premiums on marketable securities | (8,891) | 2,270 | 1,294 |
Amortization of debt issuance costs | 3,799 | 187 | 0 |
Amortization of deferred contract acquisition costs | 37,339 | 26,697 | 16,029 |
Non-cash operating lease costs | 8,608 | 10,990 | 11,911 |
Common stock charitable donation expense | 0 | 13,290 | 0 |
Stock-based compensation, net of amounts capitalized | 277,656 | 155,624 | 143,341 |
Deferred income taxes | (237) | 1,335 | (1,335) |
Other | 1,384 | 1,828 | 710 |
Changes in operating assets and liabilities: | |||
Accounts receivable | (42,080) | (32,516) | (41,612) |
Deferred contract acquisition costs | (62,801) | (57,924) | (38,129) |
Prepaid expenses and other assets | (17,850) | (31,366) | (14,368) |
Accounts payable | 13,580 | 6,143 | (327) |
Accrued expenses and other liabilities | 9,948 | 61,132 | 15,837 |
Operating lease liabilities | (9,209) | (10,866) | (11,224) |
Deferred revenue | 76,352 | 87,285 | 64,077 |
Net cash used in operating activities | (157,333) | (105,060) | (82,057) |
CASH FLOWS FROM INVESTING ACTIVITIES | |||
Capitalization of internal-use software costs | (10,334) | (5,342) | (3,610) |
Purchases of marketable securities | (2,051,908) | (663,595) | (329,616) |
Sales of marketable securities | 0 | 0 | 4,988 |
Maturities of marketable securities | 1,200,558 | 271,942 | 152,419 |
Purchases of property and equipment | (4,121) | (3,600) | (1,040) |
Other | 0 | 12 | 0 |
Net cash used in investing activities | (865,805) | (400,583) | (176,859) |
CASH FLOWS FROM FINANCING ACTIVITIES | |||
Proceeds from initial public offering, net of underwriting discounts and commissions | 0 | 786,600 | 0 |
Proceeds from issuance of common stock upon exercise of vested options | 42,461 | 51,737 | 12,376 |
Proceeds from issuance of common stock upon early exercise of unvested options | 416 | 19,454 | 4,765 |
Repurchases of unvested options | (789) | (482) | (87) |
Proceeds from issuance of redeemable convertible preferred stock, net of issuance costs | 0 | 0 | 259,815 |
Payments of deferred offering costs | 0 | (3,125) | (111) |
Proceeds from convertible senior notes, net of issuance costs | (786) | 1,081,300 | 0 |
Payments for purchase of capped calls | 0 | (90,970) | 0 |
Proceeds from issuance of common stock under employee stock purchase plan | 40,939 | 0 | 0 |
Net cash provided by financing activities | 82,241 | 1,844,514 | 276,758 |
Effect of exchange rate changes on cash, cash equivalents, and restricted cash | (4) | 5 | (7) |
Net (decrease) increase in cash, cash equivalents, and restricted cash | (940,901) | 1,338,876 | 17,835 |
Cash, cash equivalents, and restricted cash at beginning of period | 1,376,682 | 37,806 | 19,971 |
Cash, cash equivalents, and restricted cash at end of period | 435,781 | 1,376,682 | 37,806 |
Reconciliation of cash, cash equivalents, and restricted cash within the consolidated balance sheets to the amounts shown above: | |||
Cash and cash equivalents | 435,781 | 1,375,932 | 36,789 |
Restricted cash included in other assets, current and non-current | 0 | 750 | 1,017 |
Total cash, cash equivalents, and restricted cash | 435,781 | 1,376,682 | 37,806 |
Cash paid for: | |||
Income taxes | 5,529 | 2,168 | 960 |
Non-cash investing and financing activities: | |||
Stock-based compensation capitalized in internal-use software costs | 7,544 | 2,625 | 547 |
Right-of-use assets obtained in exchange for new operating lease liabilities | 998 | 813 | 0 |
Property and equipment included in accounts payable and accrued expenses and other liabilities | 0 | 0 | 203 |
Issuance of common stock upon exercise of vested options included in prepaid expenses and other current assets | 0 | 55 | 54 |
Vesting of early exercised stock options | 11,467 | 10,235 | 7,030 |
Conversion of convertible founder stock for Series E redeemable convertible preferred stock | 0 | 0 | 109,035 |
Unpaid deferred offering costs | 0 | 0 | 36 |
Convertible senior notes issuance costs included in accrued expenses and other liabilities | $ 0 | $ 786 | $ 0 |
Organization and Description of
Organization and Description of Business | 12 Months Ended |
Dec. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Description of Business | 1. Organization and Description of Business Description of Business Confluent, Inc. (“Confluent” or the “Company”) created a data infrastructure platform focused on data in motion. Confluent’s platform allows customers to connect their applications, systems, and data layers and can be deployed either as a self-managed software offering, Confluent Platform, or as a fully-managed cloud-native software-as-a-service (“SaaS”) offering, Confluent Cloud. Confluent also offers professional services and education services. The Company was incorporated in the state of Delaware in September 2014 and is headquartered in California with various other global office locations. |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Summary of Significant Accounting Policies | 2. Basis of Presentation and Summary of Significant Accounting Policies Basis of Presentation The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Reclassifications Certain amounts in the prior year consolidated financial statements have been reclassified to conform to the presentation of the current year consolidated financial statements. These reclassifications had no effect on consolidated net loss, stockholders’ equity, or cash flows as previously reported. Use of Estimates The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Such estimates include, but are not limited to, the standalone selling price (“SSP”) for each distinct performance obligation included in customer contracts, deferred contract acquisition costs and their period of benefit, valuation of stock-based awards, the fair value of the Company’s common stock prior to its initial public offering (“IPO”) in June 2021, capitalization and estimated useful life of internal-use software, the incremental borrowing rate used to measure operating lease liabilities, and accounting for income taxes. The Company bases its estimates on historical and anticipated results, trends, and various other assumptions that it believes are reasonable under the circumstances. Estimates and assumptions about future events and their effects, including the impact of the COVID-19 pandemic and global macroeconomic conditions, cannot be determined with certainty and therefore require the exercise of judgment. Actual results could differ from those estimates and any such differences may be material to the Company’s consolidated financial statements. Functional Currency The reporting currency of the Company is the U.S. dollar. The U.S. dollar is the functional currency for all subsidiaries, and therefore, foreign currency denominated monetary assets and liabilities are remeasured into U.S. dollars at exchange rates at the balance sheet date, and foreign currency denominated non-monetary assets and liabilities are remeasured into U.S. dollars at historical exchange rates. Gains or losses from foreign currency remeasurement and settlements are included in other income (expense), net in the consolidated statements of operations. Net foreign exchange losses were $ 2.5 million for the year ended December 31, 2022 and no t material for the years ended December 31, 2021 and 2020. Cash and Cash Equivalents The Company considers all highly liquid investments, including money market funds, U.S. treasury securities, U.S. agency obligations, and commercial paper with remaining maturities at the date of purchase of three months or less, to be cash equivalents. Marketable Securities The Company’s marketable securities consist of corporate notes and bonds, commercial paper, U.S. agency obligations, U.S. treasury securities, and municipal bonds. The Company determines the appropriate classification of its marketable securities at the time of purchase and reevaluates such determination at each balance sheet date. The Company has classified and accounted for its marketable securities as available-for-sale securities. The Company may sell these securities at any time for use in its current operations or for other purposes, even prior to maturity. As a result, the Company classifies its marketable securities within current assets. Available-for-sale securities are recorded at fair value each reporting period, and are adjusted for amortization of premiums and accretion of discounts to maturity and such amortization and accretion are included in other income (expense), net in the consolidated statements of operations. Realized gains and losses are determined based on the specific identification method and are reported in other income (expense), net in the consolidated statements of operations. Unrealized gains are reported as a separate component of accumulated other comprehensive income (loss) on the consolidated balance sheets until realized. For available-for-sale debt securities in an unrealized loss position, the Company first assesses whether it intends to sell the security or it is more likely than not that the Company will be required to sell the security before the recovery of its entire amortized cost basis. If either of these criteria is met, the security’s amortized cost basis is written down to fair value through other income (expense), net in the consolidated statements of operations. If neither of these criteria is met, the Company evaluates whether the decline in fair value below amortized cost is due to credit or non-credit related factors. In making this assessment, the Company considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and any adverse conditions specifically related to the security, among other factors. Credit related unrealized losses are recognized as an allowance for expected credit losses of available-for-sale debt securities on the consolidated balance sheets with a corresponding charge in other income (expense), net in the consolidated statements of operations. Non-credit related unrealized losses are included in accumulated other comprehensive income (loss). Restricted Cash Restricted cash represents cash deposits with financial institutions in support of letters of credit outstanding in favor of certain landlords related to non-cancelable operating lease agreements to leased office spaces . Restricted cash is presented in prepaid expenses and other current assets for leases that expire within one year and in other assets, non-current for leases that expire more than one year from the balance sheet date. Fair Value of Financial Instruments Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants on the measurement date. The accounting guidance establishes a three-tiered hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value as follows: • Level 1 Inputs: Observable inputs such as unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date. • Level 2 Inputs: Observable inputs other than quoted prices included in Level 1, such as quoted prices in less active markets or model-derived valuations that are observable either directly or indirectly. • Level 3 Inputs: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The Company’s financial instruments consist of cash equivalents, marketable securities, accounts receivable, accounts payable, accrued expenses, derivative instruments, and convertible senior notes. Cash equivalents and marketable securities are recorded at fair value. Accounts receivable, accounts payable, and accrued expenses are stated at their carrying value, which approximates fair value due to the short time to the expected receipt or payment date. See Note 4 for further details regarding the fair value of the Company’s derivative instruments and convertible senior notes. Accounts Receivable and Allowance for Credit Losses Accounts receivable on the consolidated balance sheets consists of trade accounts receivable and unbilled receivables, net of an allowance for expected credit losses. Trade accounts receivable are stated at the invoiced amount and consist of amounts currently due from customers. Unbilled receivables represent revenue recognized in excess of invoiced amounts for the Company’s unconditional right to consideration in exchange for goods or services that the Company has transferred to the customer, such that only the passage of time is required before payment of consideration is due. The unbilled receivables balance was $ 51.3 million and $ 32.3 million as of December 31, 2022 and 2021, respectively. Accounts receivable are reduced by an allowance for expected credit losses. The allowance for expected credits losses represents the best estimate of lifetime expected credit losses against the existing accounts receivable, inclusive of unbilled receivables, based on certain factors including the age of the receivable balance, past collection experience with the customer, historical write-off experience, credit quality of the customer, current economic conditions, and reasonable and supportable forecasts of future economic conditions. Accounts receivable deemed uncollectible are written off against the allowance for expected credit losses when identified and the Company no longer actively pursues collection of the receivable. The Company’s allowance for expected credit losses was no t material as of December 31, 2022 and 2021 . Additions to and write-offs against the allowance for expected credit losses were no t material for the years ended December 31, 2022, 2021, and 2020 . Derivative Instruments and Hedging The Company enters into foreign currency forward contracts with certain financial institutions to mitigate the impact of foreign currency fluctuations on future cash flows and earnings. All of the Company’s foreign currency forward contracts are designated as cash flow hedges. The foreign currency forward contracts generally have maturities of 13 months or less. The Company recognizes all forward contracts as either assets or liabilities on the consolidated balance sheets at fair value. Gains and losses on each forward contract are initially reported as a component of accumulated other comprehensive income (loss) (“AOCI”), and subsequently reclassified into cost of revenue or operating expense in the same period, or periods, during which the hedged transaction affects earnings. The Company evaluates the effectiveness of its cash flow hedges on a quarterly basis and does not exclude any component of the changes in fair value of the derivative instruments for effectiveness testing purposes. The Company classifies cash flows related to its cash flow hedges as operating activities in its consolidated statements of cash flows. The Company has master netting agreements with each of its counterparties, which permit net settlement of multiple, separate derivative contracts with a single payment. The Company does not have collateral requirements with any of its counterparties. Although the Company is allowed to present the fair value of derivative instruments on a net basis according to master netting arrangements, the Company has elected to present its derivative instruments on a gross basis in the consolidated financial statements. The Company does not use derivative instruments for trading or speculative purposes. Concentration of Risks Financial instruments that potentially subject the Company to concentrations of credit risk are primarily cash and cash equivalents, restricted cash, marketable securities, accounts receivable, and derivative instruments. The primary focus of the Company’s investment strategy is to preserve capital and meet liquidity requirements. The Company invests its excess cash in highly rated money market funds and in marketable securities. The Company extends credit to customers in the normal course of business. The Company maintains an allowance for expected credit losses on customers’ accounts when deemed necessary. The Company mitigates its counterparty credit risk related to derivative instruments by transacting with major financial institutions with high credit ratings. No customer represented 10 % or greater of total revenue for the years ended December 31, 2022, 2021, and 2020 . No customer represented 10 % or greater of gross accounts receivable as of December 31, 2022 and 2021. Deferred Contract Acquisition Costs The Company capitalizes incremental costs of obtaining a contract with a customer if such costs are recoverable. Such costs primarily consist of sales commissions earned by the Company’s sales force and the associated payroll taxes. Sales commissions for new revenue contracts, including incremental sales to existing customers, are deferred and then amortized over an estimated period of benefit, which the Company has determined to be five years. To determine the period of benefit, the Company has considered its technology development cycle, the cadence of software releases, the nature of its customer contracts, the duration of customer relationships, and the expected renewal period. Sales commissions for renewal contracts (which are not considered commensurate with sales commissions for new revenue contracts and incremental sales to existing customers) are deferred and then amortized over the renewal contract term. Amortization of deferred contract acquisition costs is included in sales and marketing expenses in the consolidated statements of operations. The Company periodically reviews the carrying amount of deferred contract acquisition costs to determine whether events or changes in circumstances have occurred that could impact the period of benefit of these deferred costs. The Company did no t recognize any impairment of deferred contract acquisition costs during the years ended December 31, 2022, 2021, and 2020 . Capitalized Software Costs Software development costs for software to be sold, leased, or otherwise marketed are expensed as incurred until the establishment of technological feasibility, at which time those costs are capitalized until the product is available for general release to customers and amortized over the estimated life of the product. Technological feasibility is established upon the completion of a working prototype that has been certified as having no critical bugs and is a release candidate. Costs to develop software that is marketed externally have no t been capitalized as the current software development process is essentially completed concurrently with the establishment of technological feasibility and were not material for the periods presented. As such, all related software development costs are expensed as incurred and included in research and development expenses in the consolidated statements of operations. Costs related to software acquired, developed, or modified solely to meet the Company’s internal requirements are capitalized. Costs incurred during the preliminary planning and evaluation stage of the project and during the post-implementation operational stage are expensed as incurred. Costs incurred during the application development stage of the project are capitalized within property and equipment, net on the consolidated balance sheets. Amortization is computed using the straight-line method over the estimated useful life of the capitalized software asset, which is generally 3 years. The amortization of internal-use software costs is included in cost of revenue in the consolidated statements of operations. The Company evaluates the useful life of these assets on a periodic basis and tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets. The Company did no t recognize any impairment of capitalized internal-use software costs during the years ended December 31, 2022, 2021, and 2020 . Property and Equipment, Net Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Repairs and maintenance costs are expensed as incurred. The estimated lives of the Company’s assets are as follows: Useful Lives Computers, equipment, and software 3 years Furniture and fixtures 5 years Leasehold improvements Shorter of the remaining lease term or useful life Upon retirement or sale, the cost of assets disposed of and the related accumulated depreciation and amortization are removed from the consolidated financial statements and any resulting gain or loss is reflected in the consolidated statements of operations. There were no material gains or losses incurred as a result of retirement or sale during the years ended December 31, 2022, 2021, and 2020 . Leases Leases arise from contractual obligations that convey the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. The Company determines if a contract is, or contains, a lease at contract inception. All of the Company’s leases are operating leases and are included in operating lease right-of-use assets, operating lease liabilities, and operating lease liabilities, non-current on the consolidated balance sheets. The Company accounts for lease components and non-lease components as a single lease component for all leases. The Company has elected an accounting policy to not recognize short-term leases, which have a lease term of twelve months or less, on the consolidated balance sheets. Operating lease right-of-use assets and operating lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term discounted using the Company’s incremental borrowing rate. Operating lease right-of-use assets also include any lease payments made and exclude lease incentives. As the Company’s leases do not provide an implicit rate, the incremental borrowing rate used is estimated based on what the Company would have to pay on a collateralized basis in the currency in which the arrangement is denominated over a similar term as the lease. Lease payments include fixed payments and variable payments based on an index or rate, if any, and are recognized as lease expense on a straight-line basis over the term of the lease. The lease term includes options to extend or terminate the lease when it is reasonably certain they will be exercised. Variable lease payments not based on a rate or index are expensed as incurred. Impairment of Long-Lived Assets The Company evaluates the recoverability of long-lived assets, including property and equipment and operating lease right-of-use assets, for possible impairment whenever events or circumstances indicate that the carrying amount of such assets may not be fully recoverable. Recoverability of these assets is measured by a comparison of the carrying amounts to the future undiscounted cash flows the assets are expected to generate. If such comparison indicates that the carrying amount of long-lived assets is not recoverable, the carrying amount of such assets is reduced to fair value. There were no impairment charges related to long-lived assets during the years ended December 31, 2022, 2021, and 2020. In addition to the recoverability assessment, the Company periodically reviews the remaining estimated useful lives of its property and equipment. If the estimated useful life assumption for any asset is changed due to new information, the remaining unamortized balance would be depreciated or amortized over the revised estimated useful life on a prospective basis. Convertible Senior Notes The Company accounts for its convertible senior notes wholly as debt. Debt issuance costs incurred in connection with the issuance of the Company’s convertible senior notes are reflected in the consolidated balance sheets as a direct deduction from the carrying amount of the outstanding convertible senior notes. These costs are amortized as interest expense using the effective interest rate method over the contractual term of the convertible senior notes and is included within other income (expense), net on the consolidated statements of operations. Deferred Revenue Deferred revenue, which is a contract liability, primarily consists of customer billings or payments received in advance of revenue being recognized from the Company’s subscription and services contracts. The Company generally invoices customers annually in advance for its term-based licenses and typically annually in advance or monthly in arrears for its SaaS offering. Typical payment terms range from net 30 to net 60 days of the invoice date. Deferred revenue that is anticipated to be recognized during the succeeding twelve-month period is recorded as deferred revenue within current liabilities and the remaining portion is recorded as deferred revenue, non-current. The Company records deferred revenue upon the right to invoice or when payments have been received for subscriptions or services not delivered. Deferred revenue does not necessarily represent the total contract value of the related agreements. Revenue Recognition The Company generates revenue from the sale of subscriptions and services. Subscription revenue consists of revenue from term-based licenses that include post-contract customer support, maintenance, and upgrades, referred to together as PCS, which the Company refers to as Confluent Platform, and the Company’s SaaS offering, which the Company refers to as Confluent Cloud. Confluent Cloud customers may purchase subscriptions either without a minimum commitment contract on a month-to-month basis, which the Company refers to as pay-as-you-go, or under a usage-based minimum commitment contract of at least one year in duration, in which customers commit to a fixed minimum monetary amount at specified per-usage rates. Revenue from the Company’s pay-as-you-go arrangements was an immaterial portion of subscription revenue during the years ended December 31, 2022, 2021, and 2020. The Company primarily enters into subscription contracts with one-year terms, and subscription contracts are generally non-cancelable and non-refundable, although customers can terminate for breach if the Company materially fails to perform. Services revenue consists of revenue from professional services and education services. The Company generates sales of its subscriptions and services through its sales teams, self-service channel, and partner ecosystem, including the major cloud provider marketplaces. The consolidated financial statements reflect the Company’s accounting for revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”). Under ASC 606, the Company recognizes revenue when its customers obtain control of promised subscriptions or services in an amount that reflects the consideration that the Company expects to receive in exchange for those subscriptions or services. In determining the appropriate amount of revenue to be recognized as the Company fulfills its obligations under each of its agreements, the following steps are performed: (i) identification of the contract with a customer The Company generally contracts with customers through order forms, which are governed by master sales agreements, and through cloud provider marketplaces. The Company determines that it has a contract with a customer when the contract is approved, each party’s rights regarding the subscriptions or services to be transferred and the payment terms for the services can be identified, the Company has determined the customer has the ability and intent to pay, and the contract has commercial substance. The Company applies judgment in determining the customer’s ability and intent to pay, which is based on a variety of factors, including the customer’s historical payment experience or, in the case of a new customer, credit, and financial or other information pertaining to the customer. When a contract is entered into, the Company evaluates whether the contract is part of a larger arrangement and should be accounted for with other contracts and whether the combined or single contract includes more than one performance obligation. (ii) identification of the performance obligations in the contract Performance obligations are identified based on the subscriptions and services that will be transferred to the customer that are both (1) capable of being distinct, whereby the customer can benefit from the subscriptions or services either on their own or together with other resources that are readily available from third parties or from the Company, and (2) are distinct in the context of the contract, whereby the transfer of the subscriptions and services is separately identifiable from other promises in the contract. To the extent a contract includes multiple promised subscriptions or services, the Company applies judgment to determine whether promised subscriptions or services are capable of being distinct and distinct in the context of the contract. If these criteria are not met, or if performance obligations follow the same pattern of recognition, the promised subscriptions or services are accounted for as a combined performance obligation. The Company has concluded that its contracts with customers do not contain warranties that give rise to a separate performance obligation. (iii) measurement of the transaction price The transaction price is the total amount of consideration the Company expects to be entitled to in exchange for the subscriptions and services in a contract. The transaction price in a usage-based SaaS contract is typically equal to the minimum commitment in the contract, less any discounts provided. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. The Company’s contracts do not contain a significant financing component. (iv) allocation of the transaction price to the performance obligations; If a contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. For contracts that contain multiple performance obligations, the Company allocates the transaction price using a relative SSP allocation based on the SSPs of each performance obligation. Determining the relative SSP for contracts that contain multiple performance obligations is a critical accounting estimate. The Company establishes each SSP based on multiple factors, including prices at which the Company separately sells standalone subscriptions and services. In cases where directly observable standalone sales are not available, such as when license and PCS are not sold on a standalone basis, the Company establishes SSP by using information such as historical selling price of performance obligations in similar transactions, market conditions, and the Company’s pricing practices, which can require significant judgment and are subject to change based on continuous reevaluation. There may be more than one SSP for individual subscriptions and services due to the stratification of subscription support tiers and services. The Company also considers if there are any additional material rights inherent in a contract, and if so, it allocates revenue to the material right as a performance obligation. (v) recognition of revenue when the Company satisfies each performance obligation; The Company recognizes revenue at the time the related performance obligation is satisfied, in an amount that reflects the consideration it expects to be entitled to in exchange for those subscriptions or services. The Company records its revenue net of any withholding, value added or sales tax, as well as any discounts or marketing development funds. Subscription Revenue The Company’s subscription revenue includes revenue from Confluent Platform for licenses sold in conjunction with PCS. The license provides the right to use licensed proprietary software features, which represents significant standalone functionality and is therefore deemed a distinct performance obligation. License revenue is recognized at a point in time, upon delivery and transfer of control of the underlying license to the customer, which is typically the effective start date. Revenue from PCS is based on its continuous pattern of transfer to the customer and therefore is recognized ratably over the contract term. The Company’s subscription revenue also includes revenue from Confluent Cloud for its usage-based minimum commitment contracts and pay-as-you-go arrangements, which is recognized on a usage basis, as usage represents a direct measurement of the value to the customer of the subscription transferred as of a particular date relative to the total value to be delivered over the term of the contract. Services Revenue The Company’s services revenue includes revenue from professional services and education services, which are generally sold on a time-and-materials basis. The Company recognizes the associated revenue as services are delivered. Cost of Revenue Cost of Subscription Revenue Cost of subscription revenue primarily includes personnel-related costs, including salaries, bonuses, benefits, and stock-based compensation, for employees associated with customer support and maintenance, third-party cloud infrastructure costs, amortization of internal-use software, and allocated overhead. Cost of Services Revenue Cost of services revenue primarily includes personnel-related costs, including salaries, bonuses, benefits, and stock-based compensation, for employees associated with professional services and education services, costs for third-party contractors and partners who supplement our services delivery team , and allocated overhead. Research and Development Costs Research and development costs are expensed as incurred and consist primarily of personnel-related costs, including salaries, bonuses, benefits, and stock-based compensation, net of amounts capitalized, third-party cloud infrastructure expenses incurred in developing the Company’s offering, software and subscription services dedicated for use by the Company’s research and development organization, contractor and professional services fees, and allocated overhead. Advertising Costs Advertising costs are expensed as incurred or when the advertising first takes place, based on the nature of the advertising, and are recorded in sales and marketing expenses in the consolidated statements of operations. Advertising expense was $ 28.7 million, $ 26.7 million, and $ 10.9 million, for the years ended December 31, 2022, 2021, and 2020 , respectively. Stock-Based Compensation The Company records compensation expense in connection with all stock-based awards, including stock options and restricted stock units (“RSUs”) granted to employees and non-employees and stock purchase rights granted under the Employee Stock Purchase Plan (“ESPP”) to employees, based on the fair value of the awards granted. The Company uses the Black-Scholes option-pricing model to determine the fair value of stock options and ESPP rights on the dates of grant. Calculating the fair value of stock options and ESPP rights using the Black-Scholes model requires certain highly subjective inputs and assumptions including the fair value of the underlying common stock, the expected term of the stock option or ESPP right, and the expected volatility of the price of the Company’s common stock. The fair value of each RSU is based on the fair value of the Company’s common stock on the date of grant. For stock-based awards that vest based only on continuous service, stock-based compensation expense is recognized on a straight-line basis over the requisite service period, which is generally the vesting period of four years . For awards with both a service-based and a performance-based vesting condition, stock-based compensation expense is recognized using the accelerated attribution method over the requisite service period, from the time it is probable that the vesting condition will be met through the time the service-based vesting condition has been achieved. The Company has also granted certain options containing a provision whereby vesting is accelerated upon a change in control; stock-based compensation expense for such options is recognized on a straight-line basis over a vesting period of generally four years, as a change in control is considered to be outside of the Company’s control and is not considered probable until it occurs. Forfeitures are accounted for as they occur. Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carryi |
Marketable Securities
Marketable Securities | 12 Months Ended |
Dec. 31, 2022 | |
Investments, Debt and Equity Securities [Abstract] | |
Marketable Securities | 3. Marketable Securities The following tables summarize the fair values of the Company’s marketable securities (in thousands): December 31, 2022 Amortized Cost Unrealized Gains Unrealized Losses Fair Value U.S. treasury securities $ 1,033,587 $ 68 $ ( 4,072 ) $ 1,029,583 U.S. agency obligations 273,804 17 ( 3,570 ) 270,251 Corporate notes and bonds 160,208 9 ( 2,375 ) 157,842 Commercial paper 33,526 - ( 158 ) 33,368 Total marketable securities $ 1,501,125 $ 94 $ ( 10,175 ) $ 1,491,044 December 31, 2021 Amortized Cost Unrealized Gains Unrealized Losses Fair Value U.S. treasury securities $ 446,878 $ - $ ( 443 ) $ 446,435 Corporate notes and bonds 125,845 5 ( 246 ) 125,604 U.S. agency obligations 54,122 - ( 115 ) 54,007 Commercial paper 10,995 - - 10,995 Municipal bonds 3,045 - ( 1 ) 3,044 Total marketable securities $ 640,885 $ 5 $ ( 805 ) $ 640,085 The following table summarizes the fair values and unrealized losses of the Company’s marketable securities, classified by the length of time that the securities have been in a continuous unrealized loss position (in thousands): December 31, 2022 Less than 12 Months 12 Months or Greater Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses U.S. treasury securities $ 566,093 $ ( 2,892 ) $ 167,817 $ ( 1,180 ) $ 733,910 $ ( 4,072 ) U.S. agency obligations 201,846 ( 2,014 ) 51,595 ( 1,556 ) 253,441 ( 3,570 ) Corporate notes and bonds 90,287 ( 1,259 ) 65,579 ( 1,116 ) 155,866 ( 2,375 ) Commercial paper 33,368 ( 158 ) - - 33,368 ( 158 ) Total $ 891,594 $ ( 6,323 ) $ 284,991 $ ( 3,852 ) $ 1,176,585 $ ( 10,175 ) As of December 31, 2021, available-for-sale marketable securities in an unrealized loss position had a fair value of $ 618.3 million , none of which were in a continuous unrealized loss position for twelve months or greater. The Company does not intend to sell these securities and it is more likely than not that the Company will hold these securities until maturity or a recovery of the cost basis. The Company determined that the decline in fair value of these securities was not due to credit-related factors, and no allowance for expected credit losses was recorded as of December 31, 2022. Realized gains and losses were not material for the years ended December 31, 2022, 2021, and 2020. The following table summarizes the contractual maturities of the Company’s marketable securities (in thousands): December 31, 2022 Amortized Cost Fair Value Due within one year $ 1,240,243 $ 1,233,735 Due after one year through five years 260,882 257,309 Total $ 1,501,125 $ 1,491,044 |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 12 Months Ended |
Dec. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | 4. Fair Value of Financial Instruments The following tables summarize the Company’s financial assets and liabilities that are measured at fair value on a recurring basis (in thousands): December 31, 2022 Level 1 Level 2 Total Assets: Cash equivalents: Money market funds $ 367,699 $ - $ 367,699 U.S. treasury securities - 12,971 12,971 U.S. agency obligations - 2,000 2,000 Marketable securities: U.S. treasury securities - 1,029,583 1,029,583 U.S. agency obligations - 270,251 270,251 Corporate notes and bonds - 157,842 157,842 Commercial paper - 33,368 33,368 Derivative instruments: Foreign currency forward contracts - 672 672 Total assets $ 367,699 $ 1,506,687 $ 1,874,386 Liabilities: Derivative instruments: Foreign currency forward contracts $ - $ 19 $ 19 Total liabilities $ - $ 19 $ 19 December 31, 2021 Level 1 Level 2 Total Assets: Cash equivalents: U.S. treasury securities $ - $ 69,999 $ 69,999 Money market funds 23,857 - 23,857 Commercial paper - 4,999 4,999 Marketable securities: U.S. treasury securities - 446,435 446,435 Corporate notes and bonds - 125,604 125,604 U.S. agency obligations - 54,007 54,007 Commercial paper - 10,995 10,995 Municipal bonds - 3,044 3,044 Total assets $ 23,857 $ 715,083 $ 738,940 The Company classifies its highly liquid money market funds within Level 1 of the fair value hierarchy because they are valued based on quoted market prices in active markets. The Company classifies its U.S. treasury securities, corporate notes and bonds, U.S. agency obligations, commercial paper, municipal bonds, and foreign currency forward contracts within Level 2 of the fair value hierarchy because they are valued using inputs other than quoted prices that are directly or indirectly observable in the market, including readily available pricing sources for the identical underlying security that may not be actively traded. There were no transfers of financial assets between valuation levels during the years ended December 31, 2022, 2021, and 2020. As of December 31, 2022 and 2021, the total estimated fair value of the Company’s 0% convertible senior notes due 2027 was $ 837.3 million and $ 1,206.7 million , respectively. The fair value was determined based on the quoted price of the convertible senior notes in an inactive market on the last trading day of the reporting period and is classified within Level 2 of the fair value hierarchy. See Note 7 for further information on the Company’ s convertible senior notes. |
Derivative Instruments and Hedg
Derivative Instruments and Hedging | 12 Months Ended |
Dec. 31, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments and Hedging | 5. Derivative Instruments and Hedging In December 2022, the Company implemented a hedging program to manage its exposure to certain foreign currency exchange risks. As of December 31, 2022, the Company’s foreign currency forward contracts had an aggregate notional amount of $ 96.1 million . The fair value of the derivative instruments on the consolidated balance sheets were as follows (in thousands): December 31, 2022 Derivative Assets Derivative Liabilities Balance Sheet Location Fair Value Balance Sheet Location Fair Value Foreign currency forward contracts Prepaid expenses and other current assets $ 672 Accrued expenses and other liabilities $ 19 Total $ 672 $ 19 The following table presents the activity of derivative instruments designated as cash flow hedges and the impact of these derivative contracts on AOCI (in thousands): Amount Balance as of January 1, 2022 $ - Net gain recognized in other comprehensive income 653 Net gain (loss) reclassified from AOCI to earnings - Balance as of December 31, 2022 $ 653 As of December 31, 2022, $ 0.7 million of net unrealized gains related to the effective portion of changes in the fair value of foreign currency forward contracts designated as cash flow hedges were included in the balance of accumulated other comprehensive loss. The Company expects to reclassify a net gain of $ 0.7 million associated with the cash flow hedges from accumulated other comprehensive loss into earnings over the next 12 months. |
Balance Sheet Components
Balance Sheet Components | 12 Months Ended |
Dec. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Balance Sheet Components | 6. Balance Sheet Components Property and Equipment, Net The cost and accumulated depreciation and amortization of property and equipment were as follows (in thousands): December 31, 2022 December 31, 2021 Computers, equipment, and software $ 8,794 $ 4,567 Furniture and fixtures 977 1,322 Leasehold improvements 458 459 Capitalized internal-use software costs 25,639 8,024 Construction in progress 5,404 5,140 Property and equipment, at cost $ 41,272 $ 19,512 Less: Accumulated depreciation and amortization ( 12,183 ) ( 5,084 ) Property and equipment, net $ 29,089 $ 14,428 Depreciation and amortization expense was $ 7.6 million , $ 3.6 million and $ 1.6 million for the years ended December 31, 2022, 2021, and 2020, respectively. Accrued Expenses and Other Liabilities Accrued expenses and other liabilities consisted of the following (in thousands): December 31, 2022 December 31, 2021 Accrued compensation and benefits $ 27,799 $ 27,703 Accrued commissions 18,058 13,734 Accrued expenses 16,798 17,452 Employee contributions under employee stock purchase plan 15,283 19,247 Accrued payroll taxes 10,349 8,681 Other liabilities 14,468 12,157 Total accrued expenses and other liabilities $ 102,755 $ 98,974 |
Convertible Senior Notes
Convertible Senior Notes | 12 Months Ended |
Dec. 31, 2022 | |
Convertible Debt [Abstract] | |
Convertible Senior Notes | . Convertible Senior Notes In December 2021, the Company issued $ 1.1 billion aggregate principal amount of 0 % convertible senior notes due 2027 (the “2027 Notes”), including the exercise in full of the initial purchasers’ option to purchase up to an additional $ 100.0 million principal amount of the 2027 Notes, in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act. The 2027 Notes are general unsecured obligations of the Company and will mature on January 15, 2027, unless earlier converted, redeemed, or repurchased. The 2027 Notes do not bear regular interest, and the principal amount of the 2027 Notes will not accrete. Special interest, if any, will be payable semiannually in arrears on January 15 and July 15 of each year, beginning on July 15, 2022 (if and to the extent that special interest is then payable on the 2027 Notes). The total net proceeds from the offering, after deducting initial purchasers’ discounts and debt issuance costs, were $ 1,080.5 million. The initial conversion rate is 9.9936 shares of the Company’s Class A common stock per $1,000 principal amount of 2027 Notes (equivalent to an initial conversion price of approximately $ 100.06 per share of the Company’s Class A common stock), subject to adjustment as set forth in the indenture governing the 2027 Notes (the “Indenture”). The 2027 Notes are convertible at the option of the holders at any time prior to the close of business on the business day immediately preceding October 15, 2026, only under the following conditions: (1) during any calendar quarter commencing after the calendar quarter ending on March 31, 2022 (and only during such calendar quarter), if the last reported sale price of the Company’s Class A common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130 % of the conversion price for the 2027 Notes on each applicable trading day; (2) during the five business day period after any ten consecutive trading day period (the “measurement period”) in which the trading price per $ 1,000 principal amount of the 2027 Notes for each trading day of the measurement period was less than 98 % of the product of the last reported sale price of the Company’s Class A common stock and the conversion rate for the 2027 Notes on each such trading day; (3) if the Company calls such 2027 Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date, but only with respect to the 2027 Notes called (or deemed called) for redemption; or (4) upon the occurrence of specified corporate events as set forth in the Indenture. On or after October 15, 2026, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders of the 2027 Notes may convert all or any portion of their 2027 Notes at any time, at the option of the holder regardless of the foregoing conditions. Upon conversion, the Company may satisfy its conversion obligation by paying or delivering, as the case may be, cash, shares of Class A common stock or a combination of cash and shares of Class A common stock, at the Company’s election, in the manner and subject to the terms and conditions provided in the Indenture. In addition, following certain corporate events that occur prior to the maturity date of the 2027 Notes or if the Company delivers a notice of redemption in respect of the 2027 Notes, the Company will, under certain circumstances, increase the conversion rate of the 2027 Notes for a holder who elects to convert its 2027 Notes in connection with such a corporate event or convert its 2027 Notes called (or deemed called) for redemption in connection with such notice of redemption, as the case may be. During the year ended December 31, 2022, the conditions allowing holders of the 2027 Notes to convert have not been met. The 2027 Notes were therefore not convertible and were classified as long-term debt on the Company’s consolidated balance sheets as of December 31, 2022. The Company may not redeem the 2027 Notes prior to January 20, 2025. The Company may redeem for cash all or any portion of the 2027 Notes (subject to the certain limitations described in the Indenture), at its option, on or after January 20, 2025, if the last reported sale price of the Company’s Class A common stock has been at least 130 % of the conversion price for the 2027 Notes then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100 % of the principal amount of the 2027 Notes to be redeemed, plus accrued and unpaid special interest, if any, to, but excluding, the redemption date. If the Company redeems less than all of the outstanding 2027 Notes, at least $ 100.0 million aggregate principal amount of 2027 Notes must be outstanding and not subject to redemption as of, and after giving effect to, delivery of the relevant notice of redemption. No sinking fund is provided for the 2027 Notes. The Company incurred $ 19.5 million of debt issuance costs related to the 2027 Notes. These costs are amortized to interest expense included within other income (expense), net on the consolidated statements of operations over the contractual term of the 2027 Notes at an effective interest rate of 0.35 %. Amortization of debt issuance costs for the years ended December 31, 2022 and 2021 was $ 3.8 million and $ 0.2 million, respectively. The net carrying amount of the 2027 Notes was as follows (in thousands): December 31, 2022 December 31, 2021 Principal $ 1,100,000 $ 1,100,000 Unamortized debt issuance costs ( 15,500 ) ( 19,299 ) Net carrying amount $ 1,084,500 $ 1,080,701 Capped Calls In connection with the pricing of the 2027 Notes and the exercise in full by the initial purchasers of their option to purchase additional 2027 Notes, the Company entered into capped call transactions with certain of the initial purchasers of the 2027 Notes or their respective affiliates and other financial institutions (the “Capped Calls”). The Capped Calls each have an initial strike price of approximately $ 100.06 per share, subject to certain adjustments, which corresponds to the initial conversion price of the 2027 Notes. The Capped Calls have initial cap prices of $ 138.02 per share, subject to certain adjustments. The Capped Calls associated with the 2027 Notes cover, subject to anti-dilution adjustments, approximately 11.0 million shares of the Company’s Class A common stock. The Capped Calls are expected generally to reduce the potential dilution to the Company’s Class A common stock upon any conversion of the 2027 Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted 2027 Notes, as the case may be, with such reduction and/or offset subject to a cap based on the cap price. For accounting purposes, the Capped Calls are separate transactions and not part of the terms of the 2027 Notes. As these transactions meet certain accounting criteria, the Capped Calls are recorded in stockholders’ equity and are not accounted for as derivatives. The cost of $ 91.0 million incurred to purchase the Capped Calls was recorded as a reduction to additional paid-in capital and will not be remeasured. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 8. Commitments and Contingencies Leases The Company has entered into non-cancelable operating leases, primarily for the rent of office space expiring at various dates through 2029. Certain lease agreements contain an option for the Company to renew the lease for a term of up to three years or an option to terminate the lease early within three years of lease termination . The Company considers these options in determining the lease term and minimum lease payments on a lease-by-lease basis. None of the Company’s lease agreements contain any material non-lease components, material residual value guarantees, or material restrictive covenants. In 2019, the Company was issued a letter of credit of $ 8.2 million for its office space in Mountain View, California. No draws have been made under the letter of credit as of December 31, 2022 and 2021. In addition, the Company subleased certain floors of its unoccupied office space that expired at various dates in 2022. Sublease income is recorded as a reduction of lease expense and was no t material for the year ended December 31, 2022. Sublease income was $ 2.7 million , and $ 2.9 million for the years ended December 31, 2021, and 2020, respectively. For the years ended December 31, 2022, 2021, and 2020, lease expense, net of sublease income of $ 10.1 million , $ 10.2 million , and $ 10.8 million is included in operating expenses in the consolidated statements of operations, respectively. The Company did not have any material variable lease costs or short-term lease costs for the years ended December 31, 2022, 2021, and 2020. As of December 31, 2022 and 2021, the weighted-average remaining lease term of the Company’s operating leases was 3.8 and 4.5 years, respectively, and the weighted-average discount rate used to measure the present value of the operating lease liabilities was 4.3 % and 4.1 % , respectively. The Company’s future minimum lease payments under non-cancelable operating leases as of December 31, 2022 were as follows (in thousands): Year Ending December 31, Minimum Lease Payments 2023 $ 8,626 2024 8,670 2025 10,690 2026 7,231 Total minimum lease payments 35,217 Less: Imputed interest ( 2,706 ) Present value of future minimum lease payments $ 32,511 Purchase Obligations As of December 31, 2022, future payments under non-cancelable purchase obligations, primarily related to third-party cloud infrastructure agreements under which the Company is granted access to use certain cloud services, were as follows (in thousands): Year Ending December 31, Purchase Obligations 2023 $ 154,013 2024 143,641 2025 166,834 2026 161,976 2027 132,100 Total $ 758,564 Legal Matters From time to time, the Company has become involved in claims and other legal matters arising in the ordinary course of business. The Company investigates these claims as they arise. As of December 31, 2022 and 2021, the Company is not aware of any matters that would individually or taken together have a material adverse effect on the Company’s results of operations, financial position, or cash flows. Indemnification The Company enters into indemnification provisions under its agreements with other companies in the ordinary course of business, including customers, business partners, landlords, and certain third-party vendors. Under these arrangements, the Company agrees to indemnify, hold harmless, and reimburse the indemnified party for certain losses suffered or incurred by the indemnified party resulting from certain Company activities. The terms of these indemnification agreements are generally perpetual. The maximum potential amount of future payments the Company could be required to make under these agreements is not determinable. As of December 31, 2022 and 2021, the Company has not incurred material costs to defend lawsuits or settle claims related to these indemnification agreements. The Company maintained commercial general liability insurance and product liability insurance during the years ended December 31, 2022, 2021, and 2020 to offset certain of the Company’s potential liabilities under these indemnification provisions. The Company also indemnifies certain of its officers, directors, and certain key employees while they are serving in good faith in their respective capacities. As of December 31, 2022 and 2021 , the Company has not incurred material costs to defend lawsuits or settle claims related to these indemnification agreements. |
Revenue
Revenue | 12 Months Ended |
Dec. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | 9 . Revenue Disaggregation of Revenue The following table sets forth revenue disaggregated by geographic markets based on the location of the customer and by subscription and service categories (dollars in thousands): Year Ended December 31, 2022 2021 2020 Geographic markets: United States $ 362,132 62 % $ 246,676 64 % $ 156,104 66 % International 223,812 38 % 141,188 36 % 80,473 34 % Total revenue $ 585,944 100 % $ 387,864 100 % $ 236,577 100 % Subscriptions and services: Confluent Platform - License $ 76,019 13 % $ 69,183 18 % $ 49,043 21 % Confluent Platform - PCS 247,803 42 % 183,737 47 % 128,178 54 % Confluent Cloud 211,187 36 % 94,179 24 % 31,412 13 % Subscription 535,009 91 % 347,099 89 % 208,633 88 % Services 50,935 9 % 40,765 11 % 27,944 12 % Total revenue $ 585,944 100 % $ 387,864 100 % $ 236,577 100 % Other than the United States, no individual country represented 10% or more of total revenue during the years ended December 31, 2022, 2021, and 2020 . Remaining Performance Obligations (“RPO”) RPO represent the amount of contracted future revenue that has not yet been recognized as of the end of each period, including both deferred revenue that has been invoiced and non-cancelable committed amounts that will be invoiced and recognized as revenue in future periods. RPO exclude pay-as-you-go arrangements. As of December 31, 2022 , the Company’s RPO was $ 740.7 million, approximately 62 % of which is expected to be recognized as revenue over the next 12 months and the substantial majority of the remainder in the next 13 to 36 months. Deferred Revenue Deferred revenue, including current and non-current balances as of December 31, 2022 and 2021, was $ 322.8 million and $ 246.5 million , respectively. For the years ended December 31, 2022, 2021, and 2020, revenue recognized from deferred revenue at the beginning of each year was $ 221.1 million , $ 141.7 million , and $ 83.4 million , respectively. Deferred Contract Acquisition Costs The following table summarizes the activity of deferred contract acquisition costs (in thousands): Year Ended December 31, 2022 2021 Beginning balance $ 78,824 $ 47,599 Capitalization of contract acquisition costs 62,799 57,922 Amortization of deferred contract acquisition costs ( 37,339 ) ( 26,697 ) Ending balance $ 104,284 $ 78,824 |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2022 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity | 1 0. Stockholders’ Equity Preferred Stock In connection with the IPO, the Company’s amended and restated certificate of incorporation became effective, which authorized the issuance of 10,000,000 shares of undesignated preferred stock with a par value of $ 0.00001 per share with rights and preferences, including voting rights, designated from time to time by the board of directors. Common Stock The Company has two classes of common stock: Class A common stock and Class B common stock. In connection with the IPO, the Company’s amended and restated certificate of incorporation authorized the issuance of 1,000,000,000 shares of Class A common stock and 500,000,000 shares of Class B common stock. The shares of Class A common stock and Class B common stock are identical, except with respect to voting, converting, and transfer rights. Each share of Class A common stock is entitled to one vote. Each share of Class B common stock is entitled to ten votes. Class A and Class B common stock have a par value of $ 0.00001 per share and are referred to as common stock throughout the notes to the consolidated financial statements, unless otherwise noted. Holders of common stock are entitled to receive any dividends as may be declared from time to time by the board of directors. Each share of Class B common stock is convertible at any time at the option of the holder into one share of Class A common stock. Any holder’s shares of Class B common stock will convert automatically to Class A common stock, on a one-to-one basis, upon the following: (i) sale or transfer of such share of Class B common stock, except for permitted transfers as described in the amended and restated certificate of incorporation; (ii) the death or incapacity of the Class B common stockholder (or nine months after the date of the death or incapacity if the stockholder is one of the Company’s founders); and (iii) on the final conversion date, defined as the earliest of (a) the date fixed by our board of directors that is no less than 61 days and no more than 180 days following the date on which the outstanding shares of Class B common stock represent less than 10 % of the then outstanding shares of Class A and Class B common stock; (b) the last trading day of the fiscal year following the tenth anniversary of the Company’s IPO; or (c) the date specified by a vote of the holders of a majority of the outstanding shares of Class B common stock, voting as a single class. In June 2021, the Company donated 250,000 shares of its Class A common stock to its charitable foundation, Confluent.org. The Company recognized charitable donation expense of $ 13.3 million during the year ended December 31, 2021 within general and administrative expense based on the closing price of its Class A common stock on the date of donation. Common Stock Reserved for Future Issuance The Company has reserved the following shares of common stock for future issuance: December 31, 2022 December 31, 2021 2014 Stock Plan: Options outstanding 45,276,579 61,903,883 Restricted stock units outstanding 2,224,138 3,495,540 2021 Equity Incentive Plan: Options outstanding 22,500 22,500 Restricted stock units outstanding 17,729,318 2,938,968 Remaining shares available for future issuance 33,300,077 32,797,245 2021 Employee Stock Purchase Plan 6,493,913 5,162,575 Total 105,046,525 106,320,711 Equity Incentive Plans In September 2014, the Company’s board of directors adopted and the Company’s stockholders approved the 2014 Stock Plan (the “2014 Plan”). The 2014 Plan was also amended and restated in March 2021 and June 2021. Under the 2014 Plan, the board of directors may grant stock options and other equity-based awards to eligible employees, directors, and consultants. The 2014 Plan was terminated in June 2021 in connection with the IPO, but continues to govern the terms of outstanding awards that were granted prior to the termination of the 2014 Plan. No further equity awards will be granted under the 2014 Plan. With the establishment of the 2021 Equity Incentive Plan (the “2021 Plan”), upon the expiration, forfeiture, cancellation, or reacquisition of any shares of Class B common stock underlying outstanding stock-based awards granted under the 2014 Plan, an equal number of shares of Class A common stock will become available for grant under the 2021 Plan. Equity-based awards granted under the 2014 Plan and the 2021 Plan generally vest over four years. All stock option grants expire ten years from the date of grant. In April 2021, the Company’s board of directors adopted, and in June 2021, the Company’s stockholders approved, the 2021 Plan, which became effective at the time of the execution of the underwriting agreement related to the Company’s IPO. The 2021 Plan provides for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock awards, restricted stock units awards, performance awards, and other forms of awards to employees, directors, and consultants, including employees and consultants of the Company’s affiliates. A total of 25,812,876 shares of the Company’s Class A common stock have been reserved for future issuance under the 2021 Plan in addition to (i) the shares that remained available for grant of future awards under the 2014 Plan at the time the 2021 Plan became effective, (ii) shares underlying outstanding stock awards granted under the 2014 Plan that expire, or are forfeited, cancelled, or reacquired, as described above, and (iii) any automatic increases in the number of shares of Class A common stock reserved for future issuance under this plan. In April 2021, the Company’s board of directors adopted, and in June 2021, the Company’s stockholders approved, the 2021 Employee Stock Purchase Plan (the “2021 ESPP”), which became effective at the time of the execution of the underwriting agreement related to the Company’s IPO. The 2021 ESPP authorizes the issuance of shares of Class A common stock pursuant to purchase rights granted to employees. A total of 5,162,575 shares of the Company’s Class A common stock have been reserved for future issuance under the 2021 ESPP, in addition to any automatic increases in the number of shares of Class A common stock reserved for future issuance under this plan. Except for the initial offering period, the 2021 ESPP provides for 12-month offering periods beginning February 16 and August 16 of each year, and each offering period consists of two six-month purchase periods. The initial offering period began on June 24, 2021 and ended on August 15, 2022. The initial offering consisted of two purchase periods, with the first purchase period ending on February 15, 2022 and the second purchase period ending on August 15, 2022. The price at which Class A common stock is purchased under the 2021 ESPP is equal to 85 % of the lesser of (1) the fair market value of the Company’s Class A common stock on the offering date or (2) the fair market value of the Company’s Class A common stock on the purchase date. The 2021 ESPP offers a rollover feature pursuant to which, if the fair market value of a share of Class A common stock on the first trading day of a new purchase period is lower than the fair market value on the offering date, that offering period will terminate and participants will be automatically enrolled in a new 12-month offering period. An ESPP rollover occurred when the Company’s closing stock price on August 16, 2022 was below the closing stock price on February 16, 2022. This triggered a new 12-month offering period ending on August 15, 2023 and res ulted in immaterial incremental stock-based compensation expense to be recognized over the remaining requisite service period. Equity Awards Outstanding The following table summarizes stock equity award activity and activity regarding shares available for grant under the 2014 Plan and the 2021 Plan: Equity Awards Outstanding Shares Available for Grant Outstanding Weighted-Average Weighted-Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (in thousands) Balance as of December 31, 2021 32,797,245 61,926,383 $ 6.97 7.88 $ 4,289,643 Increase in authorized shares 13,590,094 - $ - Stock options exercised - ( 12,198,241 ) $ 3.54 Stock options forfeited or expired 4,429,063 ( 4,429,063 ) $ 8.37 Repurchases of unvested common stock 157,672 - $ - RSUs granted ( 19,504,690 ) - $ - RSUs forfeited or cancelled 1,830,693 - $ - Balance as of December 31, 2022 33,300,077 45,299,079 $ 7.76 6.99 $ 657,307 Vested as of December 31, 2022 27,282,834 $ 6.09 6.58 $ 440,977 Vested and expected to vest as of December 31, 2022 45,299,079 $ 7.76 6.99 $ 657,307 Aggregate intrinsic value represents the difference between the exercise price of the options to purchase common stock and the estimated fair value of the Company’s common stock. The intrinsic value of options exercised was $ 382.4 million , $ 976.5 million , and $ 60.8 million for the years ended December 31, 2022, 2021, and 2020 , respectively. No options were granted during the year ended December 31, 2022. The weighted-average grant-date fair value per share of options granted during the years ended December 31, 2021 and 2020 was $ 12.43 and $ 4.43 , respectively. The total grant-date fair value of stock options vested was $ 108.1 million , $ 63.6 million , and $ 29.2 million during years ended December 31, 2022, 2021, and 2020, respectively. Early Exercised Options All stock option holders have the right to exercise unvested options, which are subject to a repurchase right held by the Company at the original exercise price in the event of voluntary or involuntary termination of employment of the stockholder. As of December 31, 2022 and December 31, 2021, there were 578,119 and 2,164,577 shares that had been early exercised and were subject to repurchase, respectively. The proceeds related to early exercised options are recorded as liabilities until the options vest, at which point they are reclassified to equity. As of December 31, 2022 and December 31, 2021, the liabilities for early exercised options subject to repurchase were $ 4.0 million and $ 15.8 million , respectively, which were recorded within liability for early exercise of unvested stock options and other liabilities, non-current on the consolidated balance sheets. Shares issued for early exercised options are included in issued and outstanding shares as they are legally issued and outstanding, but are not deemed outstanding for accounting purposes until the shares vest. Performance-Based Options The Company had granted 2,875,255 options with both a service-based vesting condition and a performance-based vesting condition prior to the IPO. No performance-based options were granted subsequent to the IPO. The performance-based vesting condition was not deemed probable until consummated, and therefore, stock-based compensation related to these options remained unrecognized prior to the effectiveness of the IPO. Upon the effectiveness of the IPO in June 2021, the performance-based vesting condition was satisfied, and therefore, the Company recognized cumulative stock-based compensation expense of $ 3.8 million to general and administrative expense using the accelerated attribution method for the portion of the awards for which the service-based vesting condition had been fully or partially satisfied. RSUs The Company began granting RSUs in 2021. RSUs granted prior to the IPO had both service-based and performance-based vesting conditions. The service-based vesting condition for these awards is generally satisfied by rendering continuous service for four years , during which time the grants will vest quarterly. In November 2021, the Company’s board of directors modified the terms of the RSUs. Prior to the modification, the RSUs vested either quarterly or with a cliff vesting period of one year and continued vesting quarterly thereafter. The modification removed the requirement of the cliff vesting period of one year and did not have a material impact to the consolidated financial statements for the year ended December 31, 2021. All other significant terms of the service-based RSUs remained unchanged. The performance-based vesting condition was satisfied upon the sale of the Company’s common stock in a firm commitment underwritten public offering. The performance-based vesting condition was not deemed probable until consummated, and therefore, stock-based compensation related to these RSUs remained unrecognized prior to the effectiveness of the IPO. RSUs granted after the IPO do not contain the performance-based vesting condition described above. Upon the effectiveness of the IPO in June 2021, the performance-based vesting condition was satisfied, and therefore, the Company recognized cumulative stock-based compensation expense of $ 6.8 million using the accelerated attribution method for the portion of the awards for which the service-based vesting condition had been fully or partially satisfied. The following table summarizes RSU activity under the 2014 Plan and the 2021 Plan: RSUs Outstanding Number of Shares Weighted-Average Unvested balance as of December 31, 2021 6,434,508 $ 46.01 RSUs granted 19,504,690 $ 31.03 RSUs vested ( 4,155,049 ) $ 38.58 RSUs forfeited or cancelled ( 1,830,693 ) $ 42.91 Unvested balance as of December 31, 2022 19,953,456 $ 33.18 The total grant-date fair value of RSUs vested was $ 160.3 million and $ 22.2 million during the years ended December 31, 2022 and 2021, respectively. Determination of Fair Value The Company estimates the fair value of stock options using the Black-Scholes option-pricing model, which is dependent upon several variables, such as the fair value of the Company’s common stock, the expected option term, expected volatility of the Company’s stock price over the expected term, expected risk-free interest rate over the expected option term, and expected dividend yield. Fair Value of Common Stock : Prior to the completion of the IPO, the board of directors had determined the fair value of common stock by considering a number of objective and subjective factors, including but not limited to contemporaneous independent third-party valuations of the Company’s common stock, market performance of comparable publicly traded companies, sales of the Company’s redeemable convertible preferred stock and common stock to unrelated third parties, operating and financial performance, the lack of marketability of the Company’s common stock, general and industry-specific economic outlook, and the likelihood of achieving a liquidity event, such as an initial public offering, a merger, or acquisition of the Company given prevailing market conditions. After the completion of the IPO, the fair value of the Company’s common stock is determined by the closing price, on the date of grant, of its Class A common stock, which is traded on the Nasdaq Global Select Market. Expected Term : For option grants subject to service-based vesting conditions only, the expected term represents the period that the Company’s stock options are expected to be outstanding and is calculated using the simplified method for options that have only service-based vesting conditions. The simplified method deems the term to be the average of the time-to-vesting and the contractual life of the options. For other option grants, the Company estimates the expected term using historical data on employee exercises and post-vesting employment termination behavior, considering the contractual life of the award. Expected Volatility : Since the Company does not have a sufficient trading history of its common stock, the expected volatility was derived from the average historical stock volatilities of public companies within the Company’s industry that it considers to be comparable to its business, over a period equivalent to the expected term of the stock options. Risk-Free Interest Rate : The Company bases the risk-free interest rate on the implied yield available on U.S. Treasury zero-coupon notes with maturities equivalent to the option’s expected term. Expected Dividend Yield : The Company has not issued any dividends in its history and does not expect to issue dividends over the life of the options and therefore has estimated the dividend yield to be zero . The fair value of stock options granted was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions for the years ended December 31, 2021 and 2020. No stock options were granted during the year ended December 31, 2022: Year Ended December 31, 2021 2020 Expected term (in years) 6.17 6.17 Expected volatility 66.3 % 68.3 % Risk-free interest rate 1.1 % 0.5 % Expected dividend yield 0 % 0 % The fair value of employee stock purchase rights for offerings under the 2021 ESPP were estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions: Year Ended December 31, 2022 2021 Expected term (in years) 0.49 - 1.00 0.63 - 1.12 Expected volatility 55.0 % - 82.1 % 54.6 % - 56.7 % Risk-free interest rate 0.7 % - 3.3 % 0.1 % Expected dividend yield 0 % 0 % Stock-Based Compensation Expense Total stock-based compensation expense was as follows (in thousands): Year Ended December 31, 2022 2021 2020 Cost of revenue - subscription $ 23,136 $ 12,571 $ 2,572 Cost of revenue - services 9,253 5,418 1,745 Research and development 101,499 49,051 33,755 Sales and marketing 99,366 55,506 14,734 General and administrative 44,402 33,078 90,535 Stock-based compensation, net of amounts capitalized $ 277,656 $ 155,624 $ 143,341 Capitalized stock-based compensation 7,544 2,625 547 Total stock-based compensation $ 285,200 $ 158,249 $ 143,888 As of December 31, 2022, there was $ 750.3 million of unrecognized stock-based compensation expense, which is expected to be recognized over a weighted-average period of 2.8 years. Tender Offer In July 2020, the Company facilitated a tender offer whereby certain investors purchased shares of the Company’s convertible founder stock and common stock from certain stockholders. As a result, certain directors, employees, and non-employees of the Company sold an aggregate of 7,284,182 shares of the Company’s convertible founder stock and 1,883,233 shares of the Company’s common stock to entities affiliated with new and existing investors at a purchase price of $ 14.9687 per share for an aggregate purchase price of $ 137.2 million. Upon the sale of the Company’s stock, 7,284,182 shares of convertible founder stock were converted into shares of Series E redeemable convertible preferred stock. The purchase price in this tender offer transaction was in excess of the fair value of such shares at the time of the transaction. As a result, during the year ended December 31, 2020, the Company recorded the excess of the purchase price over fair value of $ 76.3 million as stock-based compensation expense. Secondary Sales In September 2020, a director of the Company sold an aggregate of 2,632,747 shares of the Company’s common stock to entities affiliated with an existing investor at a purchase price of $ 14.9687 per share for an aggregate purchase price of $ 39.4 million. Also in September 2020, a director and an employee of the Company sold an aggregate of 2,142,900 shares of the Company’s common stock to entities affiliated with a new investor at a purchase price of $ 14.00 per share for an aggregate purchase price of $ 30.0 million. The purchase prices in both of these secondary transactions were in excess of the fair value of such shares. As a result, during the year ended December 31, 2020, the Company recorded the excess of the purchase price over fair value of $ 35.6 million as stock-based compensation expense. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 11. Income Taxes The components of loss before income taxes were as follows (in thousands): Year Ended December 31, 2022 2021 2020 Domestic $ ( 461,919 ) $ ( 347,552 ) $ ( 234,905 ) Foreign 15,661 7,925 4,870 Loss before income taxes $ ( 446,258 ) $ ( 339,627 ) $ ( 230,035 ) The components of provision for (benefit from) income taxes were as follows (in thousands): Year Ended December 31, 2022 2021 2020 Current State $ 337 $ 251 $ 87 Foreign 6,193 1,588 1,041 Total 6,530 1,839 1,128 Deferred Foreign ( 237 ) 1,335 ( 1,335 ) Total ( 237 ) 1,335 ( 1,335 ) Provision for (benefit from) income taxes $ 6,293 $ 3,174 $ ( 207 ) The reconciliation of the income tax benefit computed at the federal statutory tax rate to the Company’s provision for (benefit from) income taxes was as follows (in thousands): Year Ended December 31, 2022 2021 2020 Income tax benefit computed at federal statutory rate $ ( 93,714 ) $ ( 71,322 ) $ ( 48,307 ) Foreign rate differential 2,668 1,214 ( 1,317 ) Stock-based compensation expense ( 14,145 ) ( 104,993 ) 24,004 Change in valuation allowance 122,724 192,301 27,446 Research and development credits ( 11,581 ) ( 14,483 ) ( 2,432 ) Other 341 457 399 Provision for (benefit from) income taxes $ 6,293 $ 3,174 $ ( 207 ) The significant components of net deferred tax balances were as follows (in thousands): December 31, 2022 2021 Deferred tax assets: Net operating loss carryforwards $ 324,950 $ 277,453 Capitalized research and development costs 74,824 - Tax credit carryforwards 46,190 30,777 Stock-based compensation expense 26,211 14,885 Accruals and reserves 8,005 6,781 Operating lease liabilities 7,524 9,398 Deferred revenue 6,065 4,095 Other 6,021 3,258 Total deferred tax assets 499,790 346,647 Less: Valuation allowance ( 461,234 ) ( 316,056 ) Deferred tax assets, net of valuation allowance 38,556 30,591 Deferred tax liabilities: Deferred contract acquisition costs ( 25,054 ) ( 18,783 ) Operating lease right-of-use assets ( 6,788 ) ( 8,559 ) Property and equipment ( 5,898 ) ( 2,558 ) Other ( 103 ) ( 214 ) Total deferred tax liabilities ( 37,843 ) ( 30,114 ) Net deferred tax assets $ 713 $ 477 The Company recognizes a valuation allowance on its deferred tax assets if it is more likely than not that some or all the deferred tax assets will not be realized. Due to a history of losses in the United States and United Kingdom, U.S. and U.K. deferred tax assets have been fully offset by a valuation allowance. The valuation allowance was $ 461.2 million as of December 31, 2022 and increased by $ 145.1 million during the year ended December 31, 2022 primarily due to increased U.S. federal and state and U.K. net operating loss carryforwards, capitalized research and development costs, and tax credit carryforwards. The valuation allowance was $ 316.1 million as of December 31, 2021 and increased by $ 242.3 million during the year ended December 31, 2021 primarily due to increased U.S. federal and state net operating loss carryforwards and tax credit carryforwards and the establishment of a valuation allowance in the United Kingdom. As of December 31, 2022, the Company intends to indefinitely reinvest its foreign earnings and cash unless such repatriation results in no or minimal tax costs. For the earnings the Company intends to indefinitely reinvest, no deferred tax liabilities for foreign withholding or other taxes have been recorded. The estimated amount of such unrecognized deferred tax liability associated with the indefinitely reinvested earnings is immaterial. As of December 31, 2022 , the Company had $ 1,283.0 million of federal net operating loss carryforwards and $ 689.3 million of state net operating loss carryforwards. Of the federal net operating loss carryforwards, $1,238.9 million can be carried forward indefinitely, but is limited to 80% of annual taxable income. The remaining federal and state net operating loss carryforwards will begin to expire in 2034 and 2025, respectively. As of December 31, 2022 , the Company had U.S. federal and state research tax credit carryforwards of $ 43.2 million and $ 19.9 million, respectively. The U.S. federal research tax credit carryforwards will begin to expire in 2034. The California research tax credit carryforwards can be carried forward indefinitely, while the research tax credit carryforwards for other states will begin to expire in 2026. As of December 31, 2022 , the Company had $ 60.8 million of foreign net operating loss carryforwards. These foreign net operating loss carryforwards have an indefinite life and do not expire. Under Section 382 of the Internal Revenue Code of 1986, as amended, and similar provisions of state law, utilization of net operating loss and tax credit carryforwards may be subject to an annual limitation due to an ownership change. As of December 31, 2022, the Company assessed that its net operating loss and tax credit carryforwards will not expire solely due to Section 382 limitations. A reconciliation of the beginning and ending balances of total unrecognized tax benefits is as follows (in thousands): Year Ended December 31, 2022 2021 2020 Beginning balance $ 12,530 $ 3,399 $ 1,623 Gross (decrease) increase for prior year tax positions ( 859 ) 192 200 Gross increase for current year tax positions 7,243 8,939 1,576 Ending balance $ 18,914 $ 12,530 $ 3,399 As of December 31, 2022, the total amount of unrecognized tax benefits, if recognized, would not affect the Company’s effective tax rate due to the existence of carryforwards and the valuation allowance in the United States and applicable U.S. state jurisdictions. The Company does not expect its gross unrecognized tax benefits to change significantly within the next 12 months. It is reasonably possible that certain unrecognized tax benefits may increase or decrease within the next 12 months due to tax examination changes, settlement activities, or the impact on recognition and measurement considerations related to the results of published tax cases or other similar activities. The Company recognizes interest and penalties related to uncertain tax positions in benefit from income taxes in the consolidated statements of operations. There were no interest and penalties associated with unrecognized income tax benefits for the years ended December 31, 2022, 2021, and 2020. The Company’s tax years from inception in 2014 through December 31, 2022 remain subject to examination by various jurisdictions. |
Net Loss Per Share
Net Loss Per Share | 12 Months Ended |
Dec. 31, 2022 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share | 1 2. Net Loss Per Share For periods in which there were shares of Class A and Class B common stock outstanding, the rights, including the liquidation and dividend rights, of the holders of Class A and Class B common stock were identical, except with respect to voting, converting, and transfer rights. As the liquidation and dividend rights were identical for Class A and Class B common stock, the undistributed earnings were allocated on a proportionate basis and the resulting net loss per share would, therefore, be the same for both Class A and Class B common stock on an individual or combined basis. The following table presents the calculation of basic and diluted net loss per share (in thousands, except share and per share data): Year Ended December 31, 2022 2021 2020 Class A and Class B Common Class A and Class B Common Common Convertible Founder Numerator: Net loss $ ( 452,551 ) $ ( 342,801 ) $ ( 219,560 ) $ ( 10,268 ) Denominator: Weighted-average shares used to compute net loss per share, basic and diluted 280,080,357 188,627,720 99,562,032 4,656,050 Net loss per share, basic and diluted $ ( 1.62 ) $ ( 1.82 ) $ ( 2.21 ) $ ( 2.21 ) The following outstanding potentially dilutive shares were excluded from the computation of diluted net loss per share for the periods presented because the impact of including them would have been anti-dilutive: December 31, 2022 December 31, 2021 December 31, 2020 Redeemable convertible preferred stock - - 115,277,850 Stock options 45,299,079 61,926,383 71,213,150 Unvested early exercised stock options 578,119 2,164,577 2,338,945 RSUs 19,953,456 6,434,508 - ESPP 1,428,206 1,322,476 - Shares issuable upon conversion of the 2027 Notes 10,992,960 10,992,960 - Total 78,251,820 82,840,904 188,829,945 The Company calculates the potential dilutive effect of its 2027 Notes under the if-converted method. Under this method, diluted net loss per share is determined by assuming that all of the 2027 Notes were converted into shares of the Company’s Class A common stock at the beginning of the reporting period. In connection with the issuance of the 2027 Notes, the Company entered into Capped Calls, which are not included for purposes of calculating the number of diluted weighted-average shares outstanding, as their effect would have been anti-dilutive. The Capped Calls are expected to partially offset the potential dilution to the Company’s Class A common stock upon any conversion of the 2027 Notes. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Events | 1 3. Subsequent Events Business Combination In January 2023, the Company acquired all outstanding shares of Immerok GmbH, an Apache Flink stream processing managed services company, for purchase consideration of approximately $ 54.9 million in cash. The Company incurred $ 1.1 million of transaction costs associated with the acquisition during the year ended December 31, 2022, which were recorded as general and administrative expenses in the consolidated statements of operations. The Company will account for the acquisition as a business combination in accordance with ASC 805. Given the limited time since the acquisition date, it is not practicable to disclose the initial accounting, including the purchase price allocation, at the time of this filing. Restructuring On January 17, 2023, the Company approved restructuring actions (the “Restructuring Plan” ) to adjust its cost structure and real estate footprint. The Restructuring Plan includes a reduction of approximately 8 % of the Company’s global workforce as of December 31, 2022, with most of these reductions expected to occur by the end of the second quarter of 2023. The Company estimates it will incur approximately $ 27 to $ 31 million in non-recurring charges in connection with the Restructuring Plan, primarily related to cash expenditures for employee transition and severance payments, employee benefits, and related facilitation costs, as well as non-cash expenditures related to lease abandonment. Of the total restructuring expenses, $ 14 to $ 17 million is expected to result in future cash outlays. The Company expects the majority of the charges to be recognized by March 31, 2023 and future cash outlays to be substantially complete by June 30, 2023. The charges that the Company expects to incur are subject to a number of assumptions, including local law requirements in various jurisdictions, and actual expenses may differ materially from the estimates disclosed above. |
Basis of Presentation and Sum_2
Basis of Presentation and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. |
Reclassifications | Reclassifications Certain amounts in the prior year consolidated financial statements have been reclassified to conform to the presentation of the current year consolidated financial statements. These reclassifications had no effect on consolidated net loss, stockholders’ equity, or cash flows as previously reported. |
Use of Estimates | Use of Estimates The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Such estimates include, but are not limited to, the standalone selling price (“SSP”) for each distinct performance obligation included in customer contracts, deferred contract acquisition costs and their period of benefit, valuation of stock-based awards, the fair value of the Company’s common stock prior to its initial public offering (“IPO”) in June 2021, capitalization and estimated useful life of internal-use software, the incremental borrowing rate used to measure operating lease liabilities, and accounting for income taxes. The Company bases its estimates on historical and anticipated results, trends, and various other assumptions that it believes are reasonable under the circumstances. Estimates and assumptions about future events and their effects, including the impact of the COVID-19 pandemic and global macroeconomic conditions, cannot be determined with certainty and therefore require the exercise of judgment. Actual results could differ from those estimates and any such differences may be material to the Company’s consolidated financial statements. |
Functional Currency | Functional Currency The reporting currency of the Company is the U.S. dollar. The U.S. dollar is the functional currency for all subsidiaries, and therefore, foreign currency denominated monetary assets and liabilities are remeasured into U.S. dollars at exchange rates at the balance sheet date, and foreign currency denominated non-monetary assets and liabilities are remeasured into U.S. dollars at historical exchange rates. Gains or losses from foreign currency remeasurement and settlements are included in other income (expense), net in the consolidated statements of operations. Net foreign exchange losses were $ 2.5 million for the year ended December 31, 2022 and no t material for the years ended December 31, 2021 and 2020. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments, including money market funds, U.S. treasury securities, U.S. agency obligations, and commercial paper with remaining maturities at the date of purchase of three months or less, to be cash equivalents. |
Marketable Securities | Marketable Securities The Company’s marketable securities consist of corporate notes and bonds, commercial paper, U.S. agency obligations, U.S. treasury securities, and municipal bonds. The Company determines the appropriate classification of its marketable securities at the time of purchase and reevaluates such determination at each balance sheet date. The Company has classified and accounted for its marketable securities as available-for-sale securities. The Company may sell these securities at any time for use in its current operations or for other purposes, even prior to maturity. As a result, the Company classifies its marketable securities within current assets. Available-for-sale securities are recorded at fair value each reporting period, and are adjusted for amortization of premiums and accretion of discounts to maturity and such amortization and accretion are included in other income (expense), net in the consolidated statements of operations. Realized gains and losses are determined based on the specific identification method and are reported in other income (expense), net in the consolidated statements of operations. Unrealized gains are reported as a separate component of accumulated other comprehensive income (loss) on the consolidated balance sheets until realized. For available-for-sale debt securities in an unrealized loss position, the Company first assesses whether it intends to sell the security or it is more likely than not that the Company will be required to sell the security before the recovery of its entire amortized cost basis. If either of these criteria is met, the security’s amortized cost basis is written down to fair value through other income (expense), net in the consolidated statements of operations. If neither of these criteria is met, the Company evaluates whether the decline in fair value below amortized cost is due to credit or non-credit related factors. In making this assessment, the Company considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and any adverse conditions specifically related to the security, among other factors. Credit related unrealized losses are recognized as an allowance for expected credit losses of available-for-sale debt securities on the consolidated balance sheets with a corresponding charge in other income (expense), net in the consolidated statements of operations. Non-credit related unrealized losses are included in accumulated other comprehensive income (loss). |
Restricted Cash | Restricted Cash Restricted cash represents cash deposits with financial institutions in support of letters of credit outstanding in favor of certain landlords related to non-cancelable operating lease agreements to leased office spaces . Restricted cash is presented in prepaid expenses and other current assets for leases that expire within one year and in other assets, non-current for leases that expire more than one year from the balance sheet date. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants on the measurement date. The accounting guidance establishes a three-tiered hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value as follows: • Level 1 Inputs: Observable inputs such as unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date. • Level 2 Inputs: Observable inputs other than quoted prices included in Level 1, such as quoted prices in less active markets or model-derived valuations that are observable either directly or indirectly. • Level 3 Inputs: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The Company’s financial instruments consist of cash equivalents, marketable securities, accounts receivable, accounts payable, accrued expenses, derivative instruments, and convertible senior notes. Cash equivalents and marketable securities are recorded at fair value. Accounts receivable, accounts payable, and accrued expenses are stated at their carrying value, which approximates fair value due to the short time to the expected receipt or payment date. See Note 4 for further details regarding the fair value of the Company’s derivative instruments and convertible senior notes. |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Credit Losses Accounts receivable on the consolidated balance sheets consists of trade accounts receivable and unbilled receivables, net of an allowance for expected credit losses. Trade accounts receivable are stated at the invoiced amount and consist of amounts currently due from customers. Unbilled receivables represent revenue recognized in excess of invoiced amounts for the Company’s unconditional right to consideration in exchange for goods or services that the Company has transferred to the customer, such that only the passage of time is required before payment of consideration is due. The unbilled receivables balance was $ 51.3 million and $ 32.3 million as of December 31, 2022 and 2021, respectively. Accounts receivable are reduced by an allowance for expected credit losses. The allowance for expected credits losses represents the best estimate of lifetime expected credit losses against the existing accounts receivable, inclusive of unbilled receivables, based on certain factors including the age of the receivable balance, past collection experience with the customer, historical write-off experience, credit quality of the customer, current economic conditions, and reasonable and supportable forecasts of future economic conditions. Accounts receivable deemed uncollectible are written off against the allowance for expected credit losses when identified and the Company no longer actively pursues collection of the receivable. The Company’s allowance for expected credit losses was no t material as of December 31, 2022 and 2021 . Additions to and write-offs against the allowance for expected credit losses were no t material for the years ended December 31, 2022, 2021, and 2020 . |
Derivative Instruments and Hedging | Derivative Instruments and Hedging The Company enters into foreign currency forward contracts with certain financial institutions to mitigate the impact of foreign currency fluctuations on future cash flows and earnings. All of the Company’s foreign currency forward contracts are designated as cash flow hedges. The foreign currency forward contracts generally have maturities of 13 months or less. The Company recognizes all forward contracts as either assets or liabilities on the consolidated balance sheets at fair value. Gains and losses on each forward contract are initially reported as a component of accumulated other comprehensive income (loss) (“AOCI”), and subsequently reclassified into cost of revenue or operating expense in the same period, or periods, during which the hedged transaction affects earnings. The Company evaluates the effectiveness of its cash flow hedges on a quarterly basis and does not exclude any component of the changes in fair value of the derivative instruments for effectiveness testing purposes. The Company classifies cash flows related to its cash flow hedges as operating activities in its consolidated statements of cash flows. The Company has master netting agreements with each of its counterparties, which permit net settlement of multiple, separate derivative contracts with a single payment. The Company does not have collateral requirements with any of its counterparties. Although the Company is allowed to present the fair value of derivative instruments on a net basis according to master netting arrangements, the Company has elected to present its derivative instruments on a gross basis in the consolidated financial statements. The Company does not use derivative instruments for trading or speculative purposes. |
Concentration of Risks | Concentration of Risks Financial instruments that potentially subject the Company to concentrations of credit risk are primarily cash and cash equivalents, restricted cash, marketable securities, accounts receivable, and derivative instruments. The primary focus of the Company’s investment strategy is to preserve capital and meet liquidity requirements. The Company invests its excess cash in highly rated money market funds and in marketable securities. The Company extends credit to customers in the normal course of business. The Company maintains an allowance for expected credit losses on customers’ accounts when deemed necessary. The Company mitigates its counterparty credit risk related to derivative instruments by transacting with major financial institutions with high credit ratings. No customer represented 10 % or greater of total revenue for the years ended December 31, 2022, 2021, and 2020 . No customer represented 10 % or greater of gross accounts receivable as of December 31, 2022 and 2021. |
Deferred Contract Acquisition Costs | Deferred Contract Acquisition Costs The Company capitalizes incremental costs of obtaining a contract with a customer if such costs are recoverable. Such costs primarily consist of sales commissions earned by the Company’s sales force and the associated payroll taxes. Sales commissions for new revenue contracts, including incremental sales to existing customers, are deferred and then amortized over an estimated period of benefit, which the Company has determined to be five years. To determine the period of benefit, the Company has considered its technology development cycle, the cadence of software releases, the nature of its customer contracts, the duration of customer relationships, and the expected renewal period. Sales commissions for renewal contracts (which are not considered commensurate with sales commissions for new revenue contracts and incremental sales to existing customers) are deferred and then amortized over the renewal contract term. Amortization of deferred contract acquisition costs is included in sales and marketing expenses in the consolidated statements of operations. The Company periodically reviews the carrying amount of deferred contract acquisition costs to determine whether events or changes in circumstances have occurred that could impact the period of benefit of these deferred costs. The Company did no t recognize any impairment of deferred contract acquisition costs during the years ended December 31, 2022, 2021, and 2020 . |
Capitalized Software Costs | Capitalized Software Costs Software development costs for software to be sold, leased, or otherwise marketed are expensed as incurred until the establishment of technological feasibility, at which time those costs are capitalized until the product is available for general release to customers and amortized over the estimated life of the product. Technological feasibility is established upon the completion of a working prototype that has been certified as having no critical bugs and is a release candidate. Costs to develop software that is marketed externally have no t been capitalized as the current software development process is essentially completed concurrently with the establishment of technological feasibility and were not material for the periods presented. As such, all related software development costs are expensed as incurred and included in research and development expenses in the consolidated statements of operations. Costs related to software acquired, developed, or modified solely to meet the Company’s internal requirements are capitalized. Costs incurred during the preliminary planning and evaluation stage of the project and during the post-implementation operational stage are expensed as incurred. Costs incurred during the application development stage of the project are capitalized within property and equipment, net on the consolidated balance sheets. Amortization is computed using the straight-line method over the estimated useful life of the capitalized software asset, which is generally 3 years. The amortization of internal-use software costs is included in cost of revenue in the consolidated statements of operations. The Company evaluates the useful life of these assets on a periodic basis and tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets. The Company did no t recognize any impairment of capitalized internal-use software costs during the years ended December 31, 2022, 2021, and 2020 . |
Property and Equipment, Net | Property and Equipment, Net Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Repairs and maintenance costs are expensed as incurred. The estimated lives of the Company’s assets are as follows: Useful Lives Computers, equipment, and software 3 years Furniture and fixtures 5 years Leasehold improvements Shorter of the remaining lease term or useful life Upon retirement or sale, the cost of assets disposed of and the related accumulated depreciation and amortization are removed from the consolidated financial statements and any resulting gain or loss is reflected in the consolidated statements of operations. There were no material gains or losses incurred as a result of retirement or sale during the years ended December 31, 2022, 2021, and 2020 . |
Leases | Leases Leases arise from contractual obligations that convey the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. The Company determines if a contract is, or contains, a lease at contract inception. All of the Company’s leases are operating leases and are included in operating lease right-of-use assets, operating lease liabilities, and operating lease liabilities, non-current on the consolidated balance sheets. The Company accounts for lease components and non-lease components as a single lease component for all leases. The Company has elected an accounting policy to not recognize short-term leases, which have a lease term of twelve months or less, on the consolidated balance sheets. Operating lease right-of-use assets and operating lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term discounted using the Company’s incremental borrowing rate. Operating lease right-of-use assets also include any lease payments made and exclude lease incentives. As the Company’s leases do not provide an implicit rate, the incremental borrowing rate used is estimated based on what the Company would have to pay on a collateralized basis in the currency in which the arrangement is denominated over a similar term as the lease. Lease payments include fixed payments and variable payments based on an index or rate, if any, and are recognized as lease expense on a straight-line basis over the term of the lease. The lease term includes options to extend or terminate the lease when it is reasonably certain they will be exercised. Variable lease payments not based on a rate or index are expensed as incurred. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets The Company evaluates the recoverability of long-lived assets, including property and equipment and operating lease right-of-use assets, for possible impairment whenever events or circumstances indicate that the carrying amount of such assets may not be fully recoverable. Recoverability of these assets is measured by a comparison of the carrying amounts to the future undiscounted cash flows the assets are expected to generate. If such comparison indicates that the carrying amount of long-lived assets is not recoverable, the carrying amount of such assets is reduced to fair value. There were no impairment charges related to long-lived assets during the years ended December 31, 2022, 2021, and 2020. In addition to the recoverability assessment, the Company periodically reviews the remaining estimated useful lives of its property and equipment. If the estimated useful life assumption for any asset is changed due to new information, the remaining unamortized balance would be depreciated or amortized over the revised estimated useful life on a prospective basis. |
Convertible Senior Notes | Convertible Senior Notes The Company accounts for its convertible senior notes wholly as debt. Debt issuance costs incurred in connection with the issuance of the Company’s convertible senior notes are reflected in the consolidated balance sheets as a direct deduction from the carrying amount of the outstanding convertible senior notes. These costs are amortized as interest expense using the effective interest rate method over the contractual term of the convertible senior notes and is included within other income (expense), net on the consolidated statements of operations. |
Deferred Revenue | Deferred Revenue Deferred revenue, which is a contract liability, primarily consists of customer billings or payments received in advance of revenue being recognized from the Company’s subscription and services contracts. The Company generally invoices customers annually in advance for its term-based licenses and typically annually in advance or monthly in arrears for its SaaS offering. Typical payment terms range from net 30 to net 60 days of the invoice date. Deferred revenue that is anticipated to be recognized during the succeeding twelve-month period is recorded as deferred revenue within current liabilities and the remaining portion is recorded as deferred revenue, non-current. The Company records deferred revenue upon the right to invoice or when payments have been received for subscriptions or services not delivered. Deferred revenue does not necessarily represent the total contract value of the related agreements. |
Revenue Recognition | Revenue Recognition The Company generates revenue from the sale of subscriptions and services. Subscription revenue consists of revenue from term-based licenses that include post-contract customer support, maintenance, and upgrades, referred to together as PCS, which the Company refers to as Confluent Platform, and the Company’s SaaS offering, which the Company refers to as Confluent Cloud. Confluent Cloud customers may purchase subscriptions either without a minimum commitment contract on a month-to-month basis, which the Company refers to as pay-as-you-go, or under a usage-based minimum commitment contract of at least one year in duration, in which customers commit to a fixed minimum monetary amount at specified per-usage rates. Revenue from the Company’s pay-as-you-go arrangements was an immaterial portion of subscription revenue during the years ended December 31, 2022, 2021, and 2020. The Company primarily enters into subscription contracts with one-year terms, and subscription contracts are generally non-cancelable and non-refundable, although customers can terminate for breach if the Company materially fails to perform. Services revenue consists of revenue from professional services and education services. The Company generates sales of its subscriptions and services through its sales teams, self-service channel, and partner ecosystem, including the major cloud provider marketplaces. The consolidated financial statements reflect the Company’s accounting for revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”). Under ASC 606, the Company recognizes revenue when its customers obtain control of promised subscriptions or services in an amount that reflects the consideration that the Company expects to receive in exchange for those subscriptions or services. In determining the appropriate amount of revenue to be recognized as the Company fulfills its obligations under each of its agreements, the following steps are performed: (i) identification of the contract with a customer The Company generally contracts with customers through order forms, which are governed by master sales agreements, and through cloud provider marketplaces. The Company determines that it has a contract with a customer when the contract is approved, each party’s rights regarding the subscriptions or services to be transferred and the payment terms for the services can be identified, the Company has determined the customer has the ability and intent to pay, and the contract has commercial substance. The Company applies judgment in determining the customer’s ability and intent to pay, which is based on a variety of factors, including the customer’s historical payment experience or, in the case of a new customer, credit, and financial or other information pertaining to the customer. When a contract is entered into, the Company evaluates whether the contract is part of a larger arrangement and should be accounted for with other contracts and whether the combined or single contract includes more than one performance obligation. (ii) identification of the performance obligations in the contract Performance obligations are identified based on the subscriptions and services that will be transferred to the customer that are both (1) capable of being distinct, whereby the customer can benefit from the subscriptions or services either on their own or together with other resources that are readily available from third parties or from the Company, and (2) are distinct in the context of the contract, whereby the transfer of the subscriptions and services is separately identifiable from other promises in the contract. To the extent a contract includes multiple promised subscriptions or services, the Company applies judgment to determine whether promised subscriptions or services are capable of being distinct and distinct in the context of the contract. If these criteria are not met, or if performance obligations follow the same pattern of recognition, the promised subscriptions or services are accounted for as a combined performance obligation. The Company has concluded that its contracts with customers do not contain warranties that give rise to a separate performance obligation. (iii) measurement of the transaction price The transaction price is the total amount of consideration the Company expects to be entitled to in exchange for the subscriptions and services in a contract. The transaction price in a usage-based SaaS contract is typically equal to the minimum commitment in the contract, less any discounts provided. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. The Company’s contracts do not contain a significant financing component. (iv) allocation of the transaction price to the performance obligations; If a contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. For contracts that contain multiple performance obligations, the Company allocates the transaction price using a relative SSP allocation based on the SSPs of each performance obligation. Determining the relative SSP for contracts that contain multiple performance obligations is a critical accounting estimate. The Company establishes each SSP based on multiple factors, including prices at which the Company separately sells standalone subscriptions and services. In cases where directly observable standalone sales are not available, such as when license and PCS are not sold on a standalone basis, the Company establishes SSP by using information such as historical selling price of performance obligations in similar transactions, market conditions, and the Company’s pricing practices, which can require significant judgment and are subject to change based on continuous reevaluation. There may be more than one SSP for individual subscriptions and services due to the stratification of subscription support tiers and services. The Company also considers if there are any additional material rights inherent in a contract, and if so, it allocates revenue to the material right as a performance obligation. (v) recognition of revenue when the Company satisfies each performance obligation; The Company recognizes revenue at the time the related performance obligation is satisfied, in an amount that reflects the consideration it expects to be entitled to in exchange for those subscriptions or services. The Company records its revenue net of any withholding, value added or sales tax, as well as any discounts or marketing development funds. Subscription Revenue The Company’s subscription revenue includes revenue from Confluent Platform for licenses sold in conjunction with PCS. The license provides the right to use licensed proprietary software features, which represents significant standalone functionality and is therefore deemed a distinct performance obligation. License revenue is recognized at a point in time, upon delivery and transfer of control of the underlying license to the customer, which is typically the effective start date. Revenue from PCS is based on its continuous pattern of transfer to the customer and therefore is recognized ratably over the contract term. The Company’s subscription revenue also includes revenue from Confluent Cloud for its usage-based minimum commitment contracts and pay-as-you-go arrangements, which is recognized on a usage basis, as usage represents a direct measurement of the value to the customer of the subscription transferred as of a particular date relative to the total value to be delivered over the term of the contract. Services Revenue The Company’s services revenue includes revenue from professional services and education services, which are generally sold on a time-and-materials basis. The Company recognizes the associated revenue as services are delivered. |
Cost of Revenue | Cost of Revenue Cost of Subscription Revenue Cost of subscription revenue primarily includes personnel-related costs, including salaries, bonuses, benefits, and stock-based compensation, for employees associated with customer support and maintenance, third-party cloud infrastructure costs, amortization of internal-use software, and allocated overhead. Cost of Services Revenue Cost of services revenue primarily includes personnel-related costs, including salaries, bonuses, benefits, and stock-based compensation, for employees associated with professional services and education services, costs for third-party contractors and partners who supplement our services delivery team , and allocated overhead. |
Research and Development Costs | Research and Development Costs Research and development costs are expensed as incurred and consist primarily of personnel-related costs, including salaries, bonuses, benefits, and stock-based compensation, net of amounts capitalized, third-party cloud infrastructure expenses incurred in developing the Company’s offering, software and subscription services dedicated for use by the Company’s research and development organization, contractor and professional services fees, and allocated overhead. |
Advertising Costs | Advertising Costs Advertising costs are expensed as incurred or when the advertising first takes place, based on the nature of the advertising, and are recorded in sales and marketing expenses in the consolidated statements of operations. Advertising expense was $ 28.7 million, $ 26.7 million, and $ 10.9 million, for the years ended December 31, 2022, 2021, and 2020 , respectively. |
Stock-Based Compensation | Stock-Based Compensation The Company records compensation expense in connection with all stock-based awards, including stock options and restricted stock units (“RSUs”) granted to employees and non-employees and stock purchase rights granted under the Employee Stock Purchase Plan (“ESPP”) to employees, based on the fair value of the awards granted. The Company uses the Black-Scholes option-pricing model to determine the fair value of stock options and ESPP rights on the dates of grant. Calculating the fair value of stock options and ESPP rights using the Black-Scholes model requires certain highly subjective inputs and assumptions including the fair value of the underlying common stock, the expected term of the stock option or ESPP right, and the expected volatility of the price of the Company’s common stock. The fair value of each RSU is based on the fair value of the Company’s common stock on the date of grant. For stock-based awards that vest based only on continuous service, stock-based compensation expense is recognized on a straight-line basis over the requisite service period, which is generally the vesting period of four years . For awards with both a service-based and a performance-based vesting condition, stock-based compensation expense is recognized using the accelerated attribution method over the requisite service period, from the time it is probable that the vesting condition will be met through the time the service-based vesting condition has been achieved. The Company has also granted certain options containing a provision whereby vesting is accelerated upon a change in control; stock-based compensation expense for such options is recognized on a straight-line basis over a vesting period of generally four years, as a change in control is considered to be outside of the Company’s control and is not considered probable until it occurs. Forfeitures are accounted for as they occur. |
Income Taxes | Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and net operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax law in effect for the years in which the temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the period that includes the enactment date. A valuation allowance is recorded for deferred tax assets if it is more likely than not that some portion or all of the deferred tax assets will not be realized. Accordingly, the need to establish such allowances is assessed periodically by considering matters such as future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies, and results of recent operations. The Company evaluates and accounts for the benefits of uncertain tax positions using a two-step approach. Recognition, step one, occurs when the Company concludes that a tax position, based solely on its technical merits, is more likely than not to be sustained upon examination. Measurement, step two, determines the largest amount of benefit that is greater than 50% likely to be realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. |
Net Loss Per Share | Net Loss Per Share The Company computes basic and diluted net loss per share attributable to Class A and Class B common stockholders for the years ended December 31, 2022 and 2021 and basic and diluted net loss per share attributable to common and convertible founder stockholders for the year ended December 31, 2020 using the two-class method required for companies with participating securities. The Company considers all series of its outstanding redeemable convertible preferred stock and unvested common stock to be participating securities as the holders of such securities have non-forfeitable dividend rights in the event that a dividend is paid on common stock. Under the two-class method, net loss is not allocated to redeemable convertible preferred stock and unvested common stock as these securities do not have a contractual obligation to share in the Company’s net losses. Basic net loss per share is computed by dividing net loss by the weighted-average number of shares outstanding during the period, less unvested common stock that is subject to repurchase. Basic and diluted net loss per share were the same for the years ended December 31, 2022, 2021, and 2020 , as the inclusion of all potentially dilutive shares was anti-dilutive due to the net loss reported for each period. |
Segment and Geographic Information | Segment and Geographic Information The Company operates its business as one operating and reportable segment as the Company’s chief operating decision maker, the Company’s Chief Executive Officer, reviews financial information on a consolidated basis for purposes of allocating resources and evaluating financial performance. As of December 31, 2022 and 2021 , substantially all of the Company’s long-lived assets, including property and equipment, net, and operating right-of-use assets were located in the United States. See Note 9 for revenue disaggregated by geographic markets. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Recently Adopted Accounting Pronouncements Credit Losses: In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost, including the Company’s accounts receivable and certain other financial instruments, with multiple codification improvement amendments issued more recently. Credit losses related to available-for-sale debt securities are required to be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. This guidance is effective for the Company for the year beginning January 1, 2023, though early adoption is permitted. The Company early adopted this guidance effective January 1, 2022 on a modified retrospective basis, and the adoption did not result in any cumulative effect adjustment to its opening accumulated deficit balance. |
Basis of Presentation and Sum_3
Basis of Presentation and Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Summary of Useful Life of Property and Equipment | The estimated lives of the Company’s assets are as follows: Useful Lives Computers, equipment, and software 3 years Furniture and fixtures 5 years Leasehold improvements Shorter of the remaining lease term or useful life |
Marketable Securities (Tables)
Marketable Securities (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Investments, Debt and Equity Securities [Abstract] | |
Schedule of Fair Value and Amortized Cost of Marketable Securities | The following tables summarize the fair values of the Company’s marketable securities (in thousands): December 31, 2022 Amortized Cost Unrealized Gains Unrealized Losses Fair Value U.S. treasury securities $ 1,033,587 $ 68 $ ( 4,072 ) $ 1,029,583 U.S. agency obligations 273,804 17 ( 3,570 ) 270,251 Corporate notes and bonds 160,208 9 ( 2,375 ) 157,842 Commercial paper 33,526 - ( 158 ) 33,368 Total marketable securities $ 1,501,125 $ 94 $ ( 10,175 ) $ 1,491,044 December 31, 2021 Amortized Cost Unrealized Gains Unrealized Losses Fair Value U.S. treasury securities $ 446,878 $ - $ ( 443 ) $ 446,435 Corporate notes and bonds 125,845 5 ( 246 ) 125,604 U.S. agency obligations 54,122 - ( 115 ) 54,007 Commercial paper 10,995 - - 10,995 Municipal bonds 3,045 - ( 1 ) 3,044 Total marketable securities $ 640,885 $ 5 $ ( 805 ) $ 640,085 |
Schedule of Fair Values and Unrealized Losses on Marketable Securities | The following table summarizes the fair values and unrealized losses of the Company’s marketable securities, classified by the length of time that the securities have been in a continuous unrealized loss position (in thousands): December 31, 2022 Less than 12 Months 12 Months or Greater Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses U.S. treasury securities $ 566,093 $ ( 2,892 ) $ 167,817 $ ( 1,180 ) $ 733,910 $ ( 4,072 ) U.S. agency obligations 201,846 ( 2,014 ) 51,595 ( 1,556 ) 253,441 ( 3,570 ) Corporate notes and bonds 90,287 ( 1,259 ) 65,579 ( 1,116 ) 155,866 ( 2,375 ) Commercial paper 33,368 ( 158 ) - - 33,368 ( 158 ) Total $ 891,594 $ ( 6,323 ) $ 284,991 $ ( 3,852 ) $ 1,176,585 $ ( 10,175 ) |
Schedule of Fair Value and Amortized Cost of Contractual Maturities | The following table summarizes the contractual maturities of the Company’s marketable securities (in thousands): December 31, 2022 Amortized Cost Fair Value Due within one year $ 1,240,243 $ 1,233,735 Due after one year through five years 260,882 257,309 Total $ 1,501,125 $ 1,491,044 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The following tables summarize the Company’s financial assets and liabilities that are measured at fair value on a recurring basis (in thousands): December 31, 2022 Level 1 Level 2 Total Assets: Cash equivalents: Money market funds $ 367,699 $ - $ 367,699 U.S. treasury securities - 12,971 12,971 U.S. agency obligations - 2,000 2,000 Marketable securities: U.S. treasury securities - 1,029,583 1,029,583 U.S. agency obligations - 270,251 270,251 Corporate notes and bonds - 157,842 157,842 Commercial paper - 33,368 33,368 Derivative instruments: Foreign currency forward contracts - 672 672 Total assets $ 367,699 $ 1,506,687 $ 1,874,386 Liabilities: Derivative instruments: Foreign currency forward contracts $ - $ 19 $ 19 Total liabilities $ - $ 19 $ 19 December 31, 2021 Level 1 Level 2 Total Assets: Cash equivalents: U.S. treasury securities $ - $ 69,999 $ 69,999 Money market funds 23,857 - 23,857 Commercial paper - 4,999 4,999 Marketable securities: U.S. treasury securities - 446,435 446,435 Corporate notes and bonds - 125,604 125,604 U.S. agency obligations - 54,007 54,007 Commercial paper - 10,995 10,995 Municipal bonds - 3,044 3,044 Total assets $ 23,857 $ 715,083 $ 738,940 |
Derivative Instruments and He_2
Derivative Instruments and Hedging (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | The fair value of the derivative instruments on the consolidated balance sheets were as follows (in thousands): December 31, 2022 Derivative Assets Derivative Liabilities Balance Sheet Location Fair Value Balance Sheet Location Fair Value Foreign currency forward contracts Prepaid expenses and other current assets $ 672 Accrued expenses and other liabilities $ 19 Total $ 672 $ 19 |
Schedule of Cash Flow Hedges Included in Accumulated Other Comprehensive Income (Loss) | The following table presents the activity of derivative instruments designated as cash flow hedges and the impact of these derivative contracts on AOCI (in thousands): Amount Balance as of January 1, 2022 $ - Net gain recognized in other comprehensive income 653 Net gain (loss) reclassified from AOCI to earnings - Balance as of December 31, 2022 $ 653 |
Balance Sheet Components (Table
Balance Sheet Components (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Summary of Property and Equipment, Net | The cost and accumulated depreciation and amortization of property and equipment were as follows (in thousands): December 31, 2022 December 31, 2021 Computers, equipment, and software $ 8,794 $ 4,567 Furniture and fixtures 977 1,322 Leasehold improvements 458 459 Capitalized internal-use software costs 25,639 8,024 Construction in progress 5,404 5,140 Property and equipment, at cost $ 41,272 $ 19,512 Less: Accumulated depreciation and amortization ( 12,183 ) ( 5,084 ) Property and equipment, net $ 29,089 $ 14,428 |
Summary of Accrued Expense and Other Liabilities | Accrued expenses and other liabilities consisted of the following (in thousands): December 31, 2022 December 31, 2021 Accrued compensation and benefits $ 27,799 $ 27,703 Accrued commissions 18,058 13,734 Accrued expenses 16,798 17,452 Employee contributions under employee stock purchase plan 15,283 19,247 Accrued payroll taxes 10,349 8,681 Other liabilities 14,468 12,157 Total accrued expenses and other liabilities $ 102,755 $ 98,974 |
Convertible Senior Notes (Table
Convertible Senior Notes (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Convertible Debt [Abstract] | |
Schedule of Net Carrying Amount of Notes | The net carrying amount of the 2027 Notes was as follows (in thousands): December 31, 2022 December 31, 2021 Principal $ 1,100,000 $ 1,100,000 Unamortized debt issuance costs ( 15,500 ) ( 19,299 ) Net carrying amount $ 1,084,500 $ 1,080,701 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Lease Payments under Non-Cancelable Operating Leases | The Company’s future minimum lease payments under non-cancelable operating leases as of December 31, 2022 were as follows (in thousands): Year Ending December 31, Minimum Lease Payments 2023 $ 8,626 2024 8,670 2025 10,690 2026 7,231 Total minimum lease payments 35,217 Less: Imputed interest ( 2,706 ) Present value of future minimum lease payments $ 32,511 |
Schedule of Future Payments under Non-Cancelable Purchase Obligations | As of December 31, 2022, future payments under non-cancelable purchase obligations, primarily related to third-party cloud infrastructure agreements under which the Company is granted access to use certain cloud services, were as follows (in thousands): Year Ending December 31, Purchase Obligations 2023 $ 154,013 2024 143,641 2025 166,834 2026 161,976 2027 132,100 Total $ 758,564 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Stockholders' Equity Note [Abstract] | |
Common Stock Reserved for Future Issuance | The Company has reserved the following shares of common stock for future issuance: December 31, 2022 December 31, 2021 2014 Stock Plan: Options outstanding 45,276,579 61,903,883 Restricted stock units outstanding 2,224,138 3,495,540 2021 Equity Incentive Plan: Options outstanding 22,500 22,500 Restricted stock units outstanding 17,729,318 2,938,968 Remaining shares available for future issuance 33,300,077 32,797,245 2021 Employee Stock Purchase Plan 6,493,913 5,162,575 Total 105,046,525 106,320,711 |
Summary of Stock Equity Award Activity | The following table summarizes stock equity award activity and activity regarding shares available for grant under the 2014 Plan and the 2021 Plan: Equity Awards Outstanding Shares Available for Grant Outstanding Weighted-Average Weighted-Average Remaining Contractual Term (in years) Aggregate Intrinsic Value (in thousands) Balance as of December 31, 2021 32,797,245 61,926,383 $ 6.97 7.88 $ 4,289,643 Increase in authorized shares 13,590,094 - $ - Stock options exercised - ( 12,198,241 ) $ 3.54 Stock options forfeited or expired 4,429,063 ( 4,429,063 ) $ 8.37 Repurchases of unvested common stock 157,672 - $ - RSUs granted ( 19,504,690 ) - $ - RSUs forfeited or cancelled 1,830,693 - $ - Balance as of December 31, 2022 33,300,077 45,299,079 $ 7.76 6.99 $ 657,307 Vested as of December 31, 2022 27,282,834 $ 6.09 6.58 $ 440,977 Vested and expected to vest as of December 31, 2022 45,299,079 $ 7.76 6.99 $ 657,307 |
Schedule of Restricted Stock Unit Activity | The following table summarizes RSU activity under the 2014 Plan and the 2021 Plan: RSUs Outstanding Number of Shares Weighted-Average Unvested balance as of December 31, 2021 6,434,508 $ 46.01 RSUs granted 19,504,690 $ 31.03 RSUs vested ( 4,155,049 ) $ 38.58 RSUs forfeited or cancelled ( 1,830,693 ) $ 42.91 Unvested balance as of December 31, 2022 19,953,456 $ 33.18 |
Schedule of Weighted-Average Assumptions to Estimate Fair Value of Stock Options | The fair value of stock options granted was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions for the years ended December 31, 2021 and 2020. No stock options were granted during the year ended December 31, 2022: Year Ended December 31, 2021 2020 Expected term (in years) 6.17 6.17 Expected volatility 66.3 % 68.3 % Risk-free interest rate 1.1 % 0.5 % Expected dividend yield 0 % 0 % |
Schedule of Weighted-Average Assumptions to Estimate Fair Value of Employee Stock Purchase Rights | The fair value of employee stock purchase rights for offerings under the 2021 ESPP were estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions: Year Ended December 31, 2022 2021 Expected term (in years) 0.49 - 1.00 0.63 - 1.12 Expected volatility 55.0 % - 82.1 % 54.6 % - 56.7 % Risk-free interest rate 0.7 % - 3.3 % 0.1 % Expected dividend yield 0 % 0 % |
Summary of Stock-Based Compensation Expense | Total stock-based compensation expense was as follows (in thousands): Year Ended December 31, 2022 2021 2020 Cost of revenue - subscription $ 23,136 $ 12,571 $ 2,572 Cost of revenue - services 9,253 5,418 1,745 Research and development 101,499 49,051 33,755 Sales and marketing 99,366 55,506 14,734 General and administrative 44,402 33,078 90,535 Stock-based compensation, net of amounts capitalized $ 277,656 $ 155,624 $ 143,341 Capitalized stock-based compensation 7,544 2,625 547 Total stock-based compensation $ 285,200 $ 158,249 $ 143,888 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Loss Before Income Taxes | The components of loss before income taxes were as follows (in thousands): Year Ended December 31, 2022 2021 2020 Domestic $ ( 461,919 ) $ ( 347,552 ) $ ( 234,905 ) Foreign 15,661 7,925 4,870 Loss before income taxes $ ( 446,258 ) $ ( 339,627 ) $ ( 230,035 ) |
Schedule of Components of Income Tax Expense (Benefit) | The components of provision for (benefit from) income taxes were as follows (in thousands): Year Ended December 31, 2022 2021 2020 Current State $ 337 $ 251 $ 87 Foreign 6,193 1,588 1,041 Total 6,530 1,839 1,128 Deferred Foreign ( 237 ) 1,335 ( 1,335 ) Total ( 237 ) 1,335 ( 1,335 ) Provision for (benefit from) income taxes $ 6,293 $ 3,174 $ ( 207 ) |
Schedule of Reconciliation of Income Tax Benefit Activity | The reconciliation of the income tax benefit computed at the federal statutory tax rate to the Company’s provision for (benefit from) income taxes was as follows (in thousands): Year Ended December 31, 2022 2021 2020 Income tax benefit computed at federal statutory rate $ ( 93,714 ) $ ( 71,322 ) $ ( 48,307 ) Foreign rate differential 2,668 1,214 ( 1,317 ) Stock-based compensation expense ( 14,145 ) ( 104,993 ) 24,004 Change in valuation allowance 122,724 192,301 27,446 Research and development credits ( 11,581 ) ( 14,483 ) ( 2,432 ) Other 341 457 399 Provision for (benefit from) income taxes $ 6,293 $ 3,174 $ ( 207 ) |
Components of net deferred tax balance | The significant components of net deferred tax balances were as follows (in thousands): December 31, 2022 2021 Deferred tax assets: Net operating loss carryforwards $ 324,950 $ 277,453 Capitalized research and development costs 74,824 - Tax credit carryforwards 46,190 30,777 Stock-based compensation expense 26,211 14,885 Accruals and reserves 8,005 6,781 Operating lease liabilities 7,524 9,398 Deferred revenue 6,065 4,095 Other 6,021 3,258 Total deferred tax assets 499,790 346,647 Less: Valuation allowance ( 461,234 ) ( 316,056 ) Deferred tax assets, net of valuation allowance 38,556 30,591 Deferred tax liabilities: Deferred contract acquisition costs ( 25,054 ) ( 18,783 ) Operating lease right-of-use assets ( 6,788 ) ( 8,559 ) Property and equipment ( 5,898 ) ( 2,558 ) Other ( 103 ) ( 214 ) Total deferred tax liabilities ( 37,843 ) ( 30,114 ) Net deferred tax assets $ 713 $ 477 |
Schedule of reconciliation of unrecognized tax benefits | A reconciliation of the beginning and ending balances of total unrecognized tax benefits is as follows (in thousands): Year Ended December 31, 2022 2021 2020 Beginning balance $ 12,530 $ 3,399 $ 1,623 Gross (decrease) increase for prior year tax positions ( 859 ) 192 200 Gross increase for current year tax positions 7,243 8,939 1,576 Ending balance $ 18,914 $ 12,530 $ 3,399 |
Revenue (Tables)
Revenue (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Summary of Revenue Disaggregated by Geographic Markets | The following table sets forth revenue disaggregated by geographic markets based on the location of the customer and by subscription and service categories (dollars in thousands): Year Ended December 31, 2022 2021 2020 Geographic markets: United States $ 362,132 62 % $ 246,676 64 % $ 156,104 66 % International 223,812 38 % 141,188 36 % 80,473 34 % Total revenue $ 585,944 100 % $ 387,864 100 % $ 236,577 100 % Subscriptions and services: Confluent Platform - License $ 76,019 13 % $ 69,183 18 % $ 49,043 21 % Confluent Platform - PCS 247,803 42 % 183,737 47 % 128,178 54 % Confluent Cloud 211,187 36 % 94,179 24 % 31,412 13 % Subscription 535,009 91 % 347,099 89 % 208,633 88 % Services 50,935 9 % 40,765 11 % 27,944 12 % Total revenue $ 585,944 100 % $ 387,864 100 % $ 236,577 100 % Other than the United States, no individual country represented 10% or more of total revenue during the years ended December 31, 2022, 2021, and 2020 . |
Schedule of Activity of Deferred Contract Acquisition Costs | The following table summarizes the activity of deferred contract acquisition costs (in thousands): Year Ended December 31, 2022 2021 Beginning balance $ 78,824 $ 47,599 Capitalization of contract acquisition costs 62,799 57,922 Amortization of deferred contract acquisition costs ( 37,339 ) ( 26,697 ) Ending balance $ 104,284 $ 78,824 |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Earnings Per Share [Abstract] | |
Schedule of Calculation of Basic and Diluted Net Loss Per Share Attributable to Class A and Class B Stockholders | The following table presents the calculation of basic and diluted net loss per share (in thousands, except share and per share data): Year Ended December 31, 2022 2021 2020 Class A and Class B Common Class A and Class B Common Common Convertible Founder Numerator: Net loss $ ( 452,551 ) $ ( 342,801 ) $ ( 219,560 ) $ ( 10,268 ) Denominator: Weighted-average shares used to compute net loss per share, basic and diluted 280,080,357 188,627,720 99,562,032 4,656,050 Net loss per share, basic and diluted $ ( 1.62 ) $ ( 1.82 ) $ ( 2.21 ) $ ( 2.21 ) |
Schedule of Antidilutive Securities Excluded from Diluted Income (Loss) per Share | The following outstanding potentially dilutive shares were excluded from the computation of diluted net loss per share for the periods presented because the impact of including them would have been anti-dilutive: December 31, 2022 December 31, 2021 December 31, 2020 Redeemable convertible preferred stock - - 115,277,850 Stock options 45,299,079 61,926,383 71,213,150 Unvested early exercised stock options 578,119 2,164,577 2,338,945 RSUs 19,953,456 6,434,508 - ESPP 1,428,206 1,322,476 - Shares issuable upon conversion of the 2027 Notes 10,992,960 10,992,960 - Total 78,251,820 82,840,904 188,829,945 |
Organization and Description _2
Organization and Description of Business - Additional Information (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Class Of Stock [Line Items] | |||
Proceeds from initial public offering, net of underwriting discounts and commissions | $ 0 | $ 786,600 | $ 0 |
Convertible Founder Stock [Member] | |||
Class Of Stock [Line Items] | |||
Convertible preferred stock, shares issued upon conversion | (635,818) |
Basis of Presentation and Sum_4
Basis of Presentation and Summary of Significant Accounting Policies (Additional Information) (Details) | 12 Months Ended | ||
Dec. 31, 2022 USD ($) Segment | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Net foreign exchange gain losses | $ 2,500,000 | $ 0 | $ 0 |
Unbilled receivables balance | 51,300,000 | 32,300,000 | |
Allowance for credit losses | 0 | 0 | |
Write-offs against the allowance for credit losses | 0 | 0 | 0 |
Impairment of deferred contract acquisition costs | 0 | 0 | 0 |
Gain (loss) on retirement of assets | 0 | 0 | 0 |
Impairment of long lived assets | 0 | 0 | 0 |
Advertisement cost | $ 28,700,000 | 26,700,000 | 10,900,000 |
Share based arrangement vesting period, years | 4 years | ||
Number of operating segment | Segment | 1 | ||
Number of reportable segment | Segment | 1 | ||
Capitalized Software Costs [Member] | |||
Capitalized software development costs | $ 0 | ||
Finite lived intangible assets useful life, years | 3 years | ||
Impairment of capitalized internal use software | $ 0 | $ 0 | $ 0 |
No Customer [Member] | Gross Account Receivable [Member] | Major Customers [Member] | |||
Percentage of Revenue | 10% | 10% | |
No Customer [Member] | Revenue [Member] | Major Customers [Member] | |||
Percentage of Revenue | 10% | 10% | 10% |
Basis of Presentation and Sum_5
Basis of Presentation and Summary of Significant Accounting Policies - Summary of Useful Life of Property and Equipment, Net (Details) | 12 Months Ended |
Dec. 31, 2022 | |
Computers, Equipment, and Software [Member] | |
Property Plant And Equipment [Line Items] | |
Useful life of Property and equipment, years | 3 years |
Furniture and Fixtures [Member] | |
Property Plant And Equipment [Line Items] | |
Useful life of Property and equipment, years | 5 years |
Marketable Securities - Schedul
Marketable Securities - Schedule of Fair Value and Amortized Cost of Marketable Securities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Marketable Securities [Line Items] | ||
Amortized Cost | $ 1,501,125 | $ 640,885 |
Unrealized Gains | 94 | 5 |
Unrealized Losses | (10,175) | (805) |
Fair Value | 1,491,044 | 640,085 |
US Treasury Securities [Member] | ||
Marketable Securities [Line Items] | ||
Amortized Cost | 1,033,587 | 446,878 |
Unrealized Gains | 68 | 0 |
Unrealized Losses | (4,072) | (443) |
Fair Value | 1,029,583 | 446,435 |
U.S. Agency Obligations [Member] | ||
Marketable Securities [Line Items] | ||
Amortized Cost | 273,804 | 54,122 |
Unrealized Gains | 17 | 0 |
Unrealized Losses | (3,570) | (115) |
Fair Value | 270,251 | 54,007 |
Corporate Notes and Bonds [ Member] | ||
Marketable Securities [Line Items] | ||
Amortized Cost | 160,208 | 125,845 |
Unrealized Gains | 9 | 5 |
Unrealized Losses | (2,375) | (246) |
Fair Value | 157,842 | 125,604 |
Commercial Paper [Member] | ||
Marketable Securities [Line Items] | ||
Amortized Cost | 33,526 | 10,995 |
Unrealized Gains | 0 | 0 |
Unrealized Losses | (158) | 0 |
Fair Value | $ 33,368 | 10,995 |
Municipal Bonds [Member] | ||
Marketable Securities [Line Items] | ||
Amortized Cost | 3,045 | |
Unrealized Gains | 0 | |
Unrealized Losses | (1) | |
Fair Value | $ 3,044 |
Marketable Securities - Sched_2
Marketable Securities - Schedule of Fair Values and Unrealized Losses on Marketable Securities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Marketable Securities [Line Items] | ||
Fair Value, Less than 12 Months | $ 891,594 | |
Fair Value, 12 Months or Greater | 284,991 | $ 0 |
Fair Value, Total | 1,176,585 | $ 618,300 |
Unrealized Losses, Less than 12 Months | (6,323) | |
Unrealized Losses, 12 Months or Greater | (3,852) | |
Unrealized losses, Total | (10,175) | |
U.S. treasury securities [Member] | ||
Marketable Securities [Line Items] | ||
Fair Value, Less than 12 Months | 566,093 | |
Fair Value, 12 Months or Greater | 167,817 | |
Fair Value, Total | 733,910 | |
Unrealized Losses, Less than 12 Months | (2,892) | |
Unrealized Losses, 12 Months or Greater | (1,180) | |
Unrealized losses, Total | (4,072) | |
U.S. Agency Obligations [Member] | ||
Marketable Securities [Line Items] | ||
Fair Value, Less than 12 Months | 201,846 | |
Fair Value, 12 Months or Greater | 51,595 | |
Fair Value, Total | 253,441 | |
Unrealized Losses, Less than 12 Months | (2,014) | |
Unrealized Losses, 12 Months or Greater | (1,556) | |
Unrealized losses, Total | (3,570) | |
Corporate Notes and Bonds [ Member] | ||
Marketable Securities [Line Items] | ||
Fair Value, Less than 12 Months | 90,287 | |
Fair Value, 12 Months or Greater | 65,579 | |
Fair Value, Total | 155,866 | |
Unrealized Losses, Less than 12 Months | (1,259) | |
Unrealized Losses, 12 Months or Greater | (1,116) | |
Unrealized losses, Total | (2,375) | |
Commercial Paper [Member] | ||
Marketable Securities [Line Items] | ||
Fair Value, Less than 12 Months | 33,368 | |
Fair Value, 12 Months or Greater | 0 | |
Fair Value, Total | 33,368 | |
Unrealized Losses, Less than 12 Months | (158) | |
Unrealized Losses, 12 Months or Greater | 0 | |
Unrealized losses, Total | $ (158) |
Marketable Securities - Additio
Marketable Securities - Additional Information (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Investments, Debt and Equity Securities [Abstract] | ||
Fair Value, 12 Months or Greater | $ 284,991 | $ 0 |
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value | 1,176,585 | $ 618,300 |
Allowance for credit losses | $ 0 |
Marketable Securities - Sched_3
Marketable Securities - Schedule of Fair Value of Contractual Maturities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Investments, Debt and Equity Securities [Abstract] | ||
Due within one year, amortized cost | $ 1,240,243 | |
Due after one year through five years, amortized cost | 260,882 | |
Amortized Cost | 1,501,125 | $ 640,885 |
Due within one year, fair value | 1,233,735 | |
Due after one year through five years, fair value | 257,309 | |
Fair Value | $ 1,491,044 | $ 640,085 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments - Financial Assets Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Marketable securities: | ||
Fair value, Marketable securities | $ 1,491,044 | $ 640,085 |
Derivative instruments: | ||
Fair value, Derivative asset | 672 | |
Derivative instruments: | ||
Fair value, Derivative liability | 19 | |
US Treasury Securities [Member] | ||
Marketable securities: | ||
Fair value, Marketable securities | 1,029,583 | 446,435 |
Corporate Notes and Bonds [ Member] | ||
Marketable securities: | ||
Fair value, Marketable securities | 157,842 | 125,604 |
Commercial Paper [Member] | ||
Marketable securities: | ||
Fair value, Marketable securities | 33,368 | 10,995 |
Municipal Bonds [Member] | ||
Marketable securities: | ||
Fair value, Marketable securities | 3,044 | |
Fair Value, Measurements, Recurring [Member] | ||
Cash equivalents, Marketable securities and Derivative instruments: | ||
Assets, Fair Value | 1,874,386 | 738,940 |
Liability, Fair value | 19 | |
Fair Value, Measurements, Recurring [Member] | US Treasury Securities [Member] | ||
Cash equivalents: | ||
Fair value, Cash equivalents | 12,971 | 69,999 |
Marketable securities: | ||
Fair value, Marketable securities | 1,029,583 | 446,435 |
Fair Value, Measurements, Recurring [Member] | Corporate Notes and Bonds [ Member] | ||
Marketable securities: | ||
Fair value, Marketable securities | 157,842 | 125,604 |
Fair Value, Measurements, Recurring [Member] | Commercial Paper [Member] | ||
Cash equivalents: | ||
Fair value, Cash equivalents | 4,999 | |
Marketable securities: | ||
Fair value, Marketable securities | 33,368 | 10,995 |
Fair Value, Measurements, Recurring [Member] | U.S. Agency Obligations [Member] | ||
Cash equivalents: | ||
Fair value, Cash equivalents | 2,000 | |
Marketable securities: | ||
Fair value, Marketable securities | 270,251 | 54,007 |
Fair Value, Measurements, Recurring [Member] | Foreign Currency Forward Contracts [Member] | ||
Derivative instruments: | ||
Fair value, Derivative asset | 672 | |
Derivative instruments: | ||
Fair value, Derivative liability | 19 | |
Fair Value, Measurements, Recurring [Member] | Municipal Bonds [Member] | ||
Marketable securities: | ||
Fair value, Marketable securities | 3,044 | |
Fair Value, Measurements, Recurring [Member] | Money Market Funds [Member] | ||
Cash equivalents: | ||
Fair value, Cash equivalents | 367,699 | 23,857 |
Fair Value, Measurements, Recurring [Member] | Level 1 [Member] | ||
Cash equivalents, Marketable securities and Derivative instruments: | ||
Assets, Fair Value | 367,699 | 23,857 |
Liability, Fair value | 0 | |
Fair Value, Measurements, Recurring [Member] | Level 1 [Member] | US Treasury Securities [Member] | ||
Cash equivalents: | ||
Fair value, Cash equivalents | 0 | 0 |
Marketable securities: | ||
Fair value, Marketable securities | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | Level 1 [Member] | Corporate Notes and Bonds [ Member] | ||
Marketable securities: | ||
Fair value, Marketable securities | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | Level 1 [Member] | Commercial Paper [Member] | ||
Cash equivalents: | ||
Fair value, Cash equivalents | 0 | |
Marketable securities: | ||
Fair value, Marketable securities | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | Level 1 [Member] | U.S. Agency Obligations [Member] | ||
Cash equivalents: | ||
Fair value, Cash equivalents | 0 | |
Marketable securities: | ||
Fair value, Marketable securities | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | Level 1 [Member] | Foreign Currency Forward Contracts [Member] | ||
Derivative instruments: | ||
Fair value, Derivative asset | 0 | |
Derivative instruments: | ||
Fair value, Derivative liability | 0 | |
Fair Value, Measurements, Recurring [Member] | Level 1 [Member] | Municipal Bonds [Member] | ||
Marketable securities: | ||
Fair value, Marketable securities | 0 | |
Fair Value, Measurements, Recurring [Member] | Level 1 [Member] | Money Market Funds [Member] | ||
Cash equivalents: | ||
Fair value, Cash equivalents | 367,699 | 23,857 |
Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | ||
Cash equivalents, Marketable securities and Derivative instruments: | ||
Assets, Fair Value | 1,506,687 | 715,083 |
Liability, Fair value | 19 | |
Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | US Treasury Securities [Member] | ||
Cash equivalents: | ||
Fair value, Cash equivalents | 12,971 | 69,999 |
Marketable securities: | ||
Fair value, Marketable securities | 1,029,583 | 446,435 |
Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | Corporate Notes and Bonds [ Member] | ||
Marketable securities: | ||
Fair value, Marketable securities | 157,842 | 125,604 |
Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | Commercial Paper [Member] | ||
Cash equivalents: | ||
Fair value, Cash equivalents | 4,999 | |
Marketable securities: | ||
Fair value, Marketable securities | 33,368 | 10,995 |
Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | U.S. Agency Obligations [Member] | ||
Cash equivalents: | ||
Fair value, Cash equivalents | 2,000 | |
Marketable securities: | ||
Fair value, Marketable securities | 270,251 | 54,007 |
Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | Foreign Currency Forward Contracts [Member] | ||
Derivative instruments: | ||
Fair value, Derivative asset | 672 | |
Derivative instruments: | ||
Fair value, Derivative liability | 19 | |
Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | Municipal Bonds [Member] | ||
Marketable securities: | ||
Fair value, Marketable securities | 3,044 | |
Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | Money Market Funds [Member] | ||
Cash equivalents: | ||
Fair value, Cash equivalents | $ 0 | $ 0 |
Fair Value of Financial Instr_4
Fair Value of Financial Instruments - Additional Information (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 |
Zero Percentage Convertible senior notes due 2027 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total estimated fair value of the 2027 Notes | $ 837.3 | $ 1,206.7 |
Derivative Instruments and He_3
Derivative Instruments and Hedging - Fair Value of Derivative Instruments on the Balance Sheet (Details) $ in Thousands | Dec. 31, 2022 USD ($) |
Derivative Instruments, Gain (Loss) [Line Items] | |
Derivative assets | $ 672 |
Derivative liabilities | $ 19 |
Foreign Exchange Forward | |
Derivative Instruments, Gain (Loss) [Line Items] | |
Derivative Asset, Statement of Financial Position [Extensible Enumeration] | Prepaid Expense and Other Assets, Current |
Derivative assets | $ 672 |
Derivative Liability, Statement of Financial Position [Extensible Enumeration] | Accrued Liabilities and Other Liabilities |
Derivative liabilities | $ 19 |
Derivative Instruments and He_4
Derivative Instruments and Hedging - Impact of derivative contracts on accumulated other comprehensive income (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Beginning Balance | $ 0 |
Net unrealized gain on derivative instruments | 653 |
Gain (loss) reclassified from AOCI to earnings | 0 |
Ending Balance | $ 653 |
Derivative Instruments and He_5
Derivative Instruments and Hedging - Additional Information (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Derivatives, Fair Value [Line Items] | |
Derivative instruments, gain (loss) reclassified from accumulated OCI into income, effective portion, net | $ 653 |
Derivative instruments, gain (loss) reclassification from accumulated OCI to income, estimated net amount to be transferred | 700 |
Foreign Exchange Forward | |
Derivatives, Fair Value [Line Items] | |
Aggregate notional amount | $ 96,100 |
Balance Sheet Components - Summ
Balance Sheet Components - Summary of Property and Equipment, Net (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Property Plant And Equipment [Line Items] | ||
Property and equipment, gross | $ 41,272 | $ 19,512 |
Less: Accumulated depreciation and amortization | (12,183) | (5,084) |
Property and equipment, net | 29,089 | 14,428 |
Computers, Equipment, and Software [Member] | ||
Property Plant And Equipment [Line Items] | ||
Property and equipment, gross | 8,794 | 4,567 |
Furniture And Fixtures [Member] | ||
Property Plant And Equipment [Line Items] | ||
Property and equipment, gross | 977 | 1,322 |
Leasehold Improvements [Member] | ||
Property Plant And Equipment [Line Items] | ||
Property and equipment, gross | 458 | 459 |
Capitalized Internal-Use Software Costs [Member] | ||
Property Plant And Equipment [Line Items] | ||
Property and equipment, gross | 25,639 | 8,024 |
Construction in Progress [Member] | ||
Property Plant And Equipment [Line Items] | ||
Property and equipment, gross | $ 5,404 | $ 5,140 |
Balance Sheet Components - Addi
Balance Sheet Components - Additional Information (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |||
Depreciation and amortization | $ 7,620 | $ 3,632 | $ 1,567 |
Balance Sheet Components - Su_2
Balance Sheet Components - Summary of Accrued Expense and Other Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Payables and Accruals [Abstract] | ||
Accrued compensation and benefits | $ 27,799 | $ 27,703 |
Accrued commissions | 18,058 | 13,734 |
Accrued expenses | 16,798 | 17,452 |
Employee contributions under employee stock purchase plan | 15,283 | 19,247 |
Accrued payroll taxes | 10,349 | 8,681 |
Other liabilities | 14,468 | 12,157 |
Total accrued expenses and other liabilities | $ 102,755 | $ 98,974 |
Convertible Senior Notes - Addi
Convertible Senior Notes - Additional information (Details) $ / shares in Units, $ in Thousands, shares in Millions | 12 Months Ended | ||
Dec. 31, 2022 USD ($) Days $ / shares shares | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Debt Instrument [Line Items] | |||
Debt instrument net proceed after discounts and cost | $ (786) | $ 1,081,300 | $ 0 |
Amortization of debt issuance costs | 3,799 | 187 | 0 |
Payments for purchase of capped calls | 0 | $ 90,970 | $ 0 |
Zero Percentage Convertible senior notes due 2027 | |||
Debt Instrument [Line Items] | |||
Debt Instrument Face Amount | 1,100,000 | ||
Debt Instrument Convertible Conversion Ratio Denominator | $ 1,000 | ||
Debt Instrument, Interest Rate, Stated Percentage | 0% | ||
Debt instrument net proceed after discounts and cost | $ 1,080,500 | ||
Number of trading days | Days | 30 | ||
Percentage of principal amount of debt redeemed | 100% | ||
Debt Issuance Costs, Gross | $ 19,500 | ||
Effective interest rate of debt | 0.35% | ||
Debt instrument percentage price | 130% | ||
Zero Percentage Convertible senior notes due 2027 | Common Stock Subject to Mandatory Redemption [Member] | |||
Debt Instrument [Line Items] | |||
Debt Instrument Face Amount | $ 100,000 | ||
Zero Percentage Convertible senior notes due 2027 | Common Class A [Member] | |||
Debt Instrument [Line Items] | |||
Convertible debt, conversion ratio | 9.9936 | ||
Debt Instrument, Convertible, Conversion Price | $ / shares | $ 100.06 | ||
Debt instrument percentage price | 130% | ||
Zero Percentage Convertible senior notes due 2027 | Maximum [Member] | |||
Debt Instrument [Line Items] | |||
Debt Instrument Face Amount | $ 100,000 | ||
Debt instrument percentage price | 98% | ||
Zero Percentage Convertible senior notes due 2027 | Minimum [Member] | |||
Debt Instrument [Line Items] | |||
Number of trading days | Days | 20 | ||
Zero Percentage Convertible senior notes due 2027 | Capped Calls [Member] | |||
Debt Instrument [Line Items] | |||
Initial strike price | $ / shares | $ 100.06 | ||
Initial cap price | $ / shares | $ 138.02 | ||
Payments for purchase of capped calls | $ 91,000 | ||
Zero Percentage Convertible senior notes due 2027 | Capped Calls [Member] | Common Class A [Member] | |||
Debt Instrument [Line Items] | |||
Adjustment to anti-dilution common stock | shares | 11 |
Convertible Senior Notes - Sche
Convertible Senior Notes - Schedule of net carrying amount of notes (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Convertible Debt [Abstract] | ||
Principal | $ 1,100,000 | $ 1,100,000 |
Unamortized debt issuance costs | (15,500) | (19,299) |
Net carrying amount | $ 1,084,500 | $ 1,080,701 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Lessee Lease Description [Line Items] | ||||
Lessee, Operating Lease, Option to Terminate | an option to terminate the lease early within three years of lease termination | |||
Sublease Income | $ 0 | $ 2,700 | $ 2,900 | |
Lease expenses | $ 10,100 | $ 10,200 | $ 10,800 | |
Weighted average remaining life of operating leases | 3 years 9 months 18 days | 4 years 6 months | ||
Weighted-average discount rate of operating leases | 4.30% | 4.10% | ||
CALIFORNIA [Member] | ||||
Lessee Lease Description [Line Items] | ||||
Letters of Credit Outstanding, Amount | $ 8,200 | |||
Maximum [Member] | ||||
Lessee Lease Description [Line Items] | ||||
Lessee, Operating Lease, Renewal Term | 3 years |
Commitments and Contingencies_2
Commitments and Contingencies - Schedule of Future Minimum Lease Payments under Non-Cancelable Operating Leases (Details) $ in Thousands | Dec. 31, 2022 USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2023 | $ 8,626 |
2024 | 8,670 |
2025 | 10,690 |
2026 | 7,231 |
Total minimum lease payments | 35,217 |
Less: Imputed interest | (2,706) |
Present value of future minimum lease payments | $ 32,511 |
Commitments and Contingencies_3
Commitments and Contingencies - Schedule of Future Payments under Non-Cancelable Purchase Obligations (Details) $ in Thousands | Dec. 31, 2022 USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2023 | $ 154,013 |
2024 | 143,641 |
2025 | 166,834 |
2026 | 161,976 |
2027 | 132,100 |
Purchase Obligation, Total | $ 758,564 |
Revenue - Summary of Revenue Di
Revenue - Summary of Revenue Disaggregated by Geographic Markets (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Disaggregation Of Revenue [Line Items] | |||
Total revenue | $ 585,944 | $ 387,864 | $ 236,577 |
Revenue Benchmark [Member] | Geographic Concentration Risk [Member] | Major Customers [Member] | |||
Disaggregation Of Revenue [Line Items] | |||
Percentage of Revenue | 100% | 100% | 100% |
Revenue Benchmark [Member] | Subscription and Service Concentration Risk [Member] | Major Customers [Member] | |||
Disaggregation Of Revenue [Line Items] | |||
Percentage of Revenue | 100% | 100% | 100% |
United States [Member] | |||
Disaggregation Of Revenue [Line Items] | |||
Total revenue | $ 362,132 | $ 246,676 | $ 156,104 |
United States [Member] | Revenue Benchmark [Member] | Geographic Concentration Risk [Member] | |||
Disaggregation Of Revenue [Line Items] | |||
Percentage of Revenue | 62% | 64% | 66% |
International [Member] | |||
Disaggregation Of Revenue [Line Items] | |||
Total revenue | $ 223,812 | $ 141,188 | $ 80,473 |
International [Member] | Revenue Benchmark [Member] | Geographic Concentration Risk [Member] | |||
Disaggregation Of Revenue [Line Items] | |||
Percentage of Revenue | 38% | 36% | 34% |
License [Member] | |||
Disaggregation Of Revenue [Line Items] | |||
Total revenue | $ 76,019 | $ 69,183 | $ 49,043 |
License [Member] | Revenue Benchmark [Member] | Subscription and Service Concentration Risk [Member] | |||
Disaggregation Of Revenue [Line Items] | |||
Percentage of Revenue | 13% | 18% | 21% |
Post Contract Customer Support [Member] | |||
Disaggregation Of Revenue [Line Items] | |||
Total revenue | $ 247,803 | $ 183,737 | $ 128,178 |
Post Contract Customer Support [Member] | Revenue Benchmark [Member] | Subscription and Service Concentration Risk [Member] | |||
Disaggregation Of Revenue [Line Items] | |||
Percentage of Revenue | 42% | 47% | 54% |
Confluent Cloud [Member] | |||
Disaggregation Of Revenue [Line Items] | |||
Total revenue | $ 211,187 | $ 94,179 | $ 31,412 |
Confluent Cloud [Member] | Revenue Benchmark [Member] | Subscription and Service Concentration Risk [Member] | |||
Disaggregation Of Revenue [Line Items] | |||
Percentage of Revenue | 36% | 24% | 13% |
Subscription [Member] | |||
Disaggregation Of Revenue [Line Items] | |||
Total revenue | $ 535,009 | $ 347,099 | $ 208,633 |
Subscription [Member] | Revenue Benchmark [Member] | Subscription and Service Concentration Risk [Member] | |||
Disaggregation Of Revenue [Line Items] | |||
Percentage of Revenue | 91% | 89% | 88% |
Services [Member] | |||
Disaggregation Of Revenue [Line Items] | |||
Total revenue | $ 50,935 | $ 40,765 | $ 27,944 |
Services [Member] | Revenue Benchmark [Member] | Subscription and Service Concentration Risk [Member] | |||
Disaggregation Of Revenue [Line Items] | |||
Percentage of Revenue | 9% | 11% | 12% |
Revenue - Additional Informatio
Revenue - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Disaggregation Of Revenue [Line Items] | |||
Revenue, remaining performance obligation, amount | $ 740.7 | ||
Revenue, remaining performance obligation, percentage | 62% | ||
Deferred revenue | $ 322.8 | $ 246.5 | |
Revenue recognized from deferred revenue | $ 221.1 | $ 141.7 | $ 83.4 |
Revenue - Schedule of Activity
Revenue - Schedule of Activity of Deferred Contract Acquisition Costs (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |||
Beginning balance | $ 78,824 | $ 47,599 | |
Capitalization of contract acquisition costs | 62,799 | 57,922 | |
Amortization of deferred contract acquisition costs | (37,339) | (26,697) | $ (16,029) |
Ending balance | $ 104,284 | $ 78,824 | $ 47,599 |
Redeemable Convertible Preferre
Redeemable Convertible Preferred Stock - Additional Information (Details) - Redeemable Convertible Preferred Stock - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Class of Stock [Line Items] | |||
Convertible founder stock (in shares) | 7,284,182 | ||
Redeemable convertible preferred stock, Par Value | $ 259,815 | ||
Conversion of redeemable convertible preferred and founder stock to Class B common stock upon initial public offering | $ (574,634) | ||
Temporary Equity, Stock Issued During Period, Shares, New Issues | 17,369,577 | ||
Redeemable Convertible Preferred Stock, Shares Outstanding | 115,277,850 | 90,624,091 |
Stockholders' Equity - Addition
Stockholders' Equity - Additional Information (Details) $ / shares in Units, $ in Thousands | 1 Months Ended | 12 Months Ended | ||||
Jun. 30, 2021 USD ($) shares | Sep. 30, 2020 USD ($) $ / shares shares | Jul. 31, 2020 USD ($) $ / shares shares | Dec. 31, 2022 USD ($) Vote $ / shares shares | Dec. 31, 2021 USD ($) $ / shares shares | Dec. 31, 2020 USD ($) $ / shares shares | |
Class Of Stock [Line Items] | ||||||
Preferred Stock, Shares Authorized | shares | 10,000,000 | 10,000,000 | ||||
Preferred Stock, Par or Stated Value Per Share | $ / shares | $ 0.00001 | $ 0.00001 | ||||
Conversion, percent threshold | 10% | |||||
Common stock charitable donation expense | $ | $ 0 | $ 13,290 | $ 0 | |||
Common stock reserved for issuance (in shares) | shares | 105,046,525 | 106,320,711 | ||||
Share-based payment arrangement, incremental cost | $ | $ 0 | |||||
Intrinsic value of options exercised | $ | $ 382,400 | $ 976,500 | $ 60,800 | |||
Weighted average grant date fair value per share of options granted | $ / shares | $ 0 | $ 12.43 | $ 4.43 | |||
Grant-date fair value of stock options vested | $ | $ 108,100 | $ 63,600 | $ 29,200 | |||
Shares early exercised and repurchase | shares | 578,119 | 2,164,577 | ||||
Liabilities for early exercise of unvested stock options and other liabilities | $ | $ 4,000 | $ 15,800 | ||||
Stock based compensation expense | $ | $ 277,656 | $ 155,624 | $ 143,341 | |||
Cumulative stock-based compensation expense | $ | $ 3,800 | |||||
Expected dividend yield | 0% | 0% | 0% | |||
Unrecognized stock-based compensation expense | $ | $ 750,300 | |||||
Unrecognized stock-based compensation expense, weighted-average period | 2 years 9 months 18 days | |||||
Tender Offer [Member] | ||||||
Class Of Stock [Line Items] | ||||||
Stock based compensation expense | $ | $ 76,300 | |||||
Shares issued, price per share | $ / shares | $ 14.9687 | |||||
Aggregate purchase price of stock issued | $ | $ 137,200 | |||||
Tender Offer [Member] | Common Stock [Member] | ||||||
Class Of Stock [Line Items] | ||||||
Number of shares sold in transaction | shares | 1,883,233 | |||||
Secondary Sales [Member] | ||||||
Class Of Stock [Line Items] | ||||||
Stock based compensation expense | $ | $ 35,600 | |||||
Secondary Sales [Member] | Director [Member] | ||||||
Class Of Stock [Line Items] | ||||||
Number of shares sold in transaction | shares | 2,632,747 | |||||
Shares issued, price per share | $ / shares | $ 14.9687 | |||||
Aggregate purchase price of stock issued | $ | $ 39,400 | |||||
Secondary Sales [Member] | Director And Employee [Member] | ||||||
Class Of Stock [Line Items] | ||||||
Number of shares sold in transaction | shares | 2,142,900 | |||||
Shares issued, price per share | $ / shares | $ 14 | |||||
Aggregate purchase price of stock issued | $ | $ 30,000 | |||||
Convertible Founder Stock [Member] | ||||||
Class Of Stock [Line Items] | ||||||
Convertible founder stock (in shares) | shares | (7,284,182) | |||||
Convertible Founder Stock [Member] | Tender Offer [Member] | ||||||
Class Of Stock [Line Items] | ||||||
Convertible founder stock (in shares) | shares | 7,284,182 | |||||
Common Class A [Member] | ||||||
Class Of Stock [Line Items] | ||||||
Common Stock, Shares Authorized | shares | 1,000,000,000 | 1,000,000,000 | ||||
Common stock, voting rights, votes per share | Vote | 1 | |||||
Number of new stock issued during the period | shares | 250,000 | |||||
Common stock charitable donation expense | $ | $ 13,300 | |||||
Common Stock, Par Value | $ / shares | $ 0.00001 | $ 0.00001 | ||||
Common Class B [Member] | ||||||
Class Of Stock [Line Items] | ||||||
Common Stock, Shares Authorized | shares | 500,000,000 | 500,000,000 | ||||
Common stock, voting rights, votes per share | Vote | 10 | |||||
Common Stock, Par Value | $ / shares | $ 0.00001 | $ 0.00001 | ||||
Series E Redeemable Convertible Preferred Stock [Member] | Tender Offer [Member] | ||||||
Class Of Stock [Line Items] | ||||||
Convertible founder stock (in shares) | shares | 7,284,182 | |||||
2021 Plan [Member] | Common Class A [Member] | ||||||
Class Of Stock [Line Items] | ||||||
Common stock reserved for issuance (in shares) | shares | 25,812,876 | |||||
2021 Employee Stock Purchase Plan [Member] | ||||||
Class Of Stock [Line Items] | ||||||
Common stock reserved for issuance (in shares) | shares | 6,493,913 | 5,162,575 | ||||
Expected dividend yield | 0% | 0% | ||||
2021 Employee Stock Purchase Plan [Member] | Common Class A [Member] | ||||||
Class Of Stock [Line Items] | ||||||
Common stock reserved for issuance (in shares) | shares | 5,162,575 | |||||
Purchase price of common stock expressed as a percentage of its fair value | 85% | |||||
Performance Based Vesting Condition [Member] | ||||||
Class Of Stock [Line Items] | ||||||
Performance options, shares | shares | 2,875,255 | |||||
Restricted Stock Units (RSUs) [Member] | ||||||
Class Of Stock [Line Items] | ||||||
Total grant-date fair value of RSUs vested | $ | $ 160,300 | $ 22,200 | ||||
Service based vesting period | 4 years | |||||
Stock based compensation expense | $ | $ 6,800 |
Stockholders' Equity - Common S
Stockholders' Equity - Common Stock Reserved for Future Issuance (Details) - shares | Dec. 31, 2022 | Dec. 31, 2021 |
Class Of Stock [Line Items] | ||
Common stock reserved for issuance (in shares) | 105,046,525 | 106,320,711 |
2014 Stock Plan [Member] | Stock Options [Member] | ||
Class Of Stock [Line Items] | ||
Common stock reserved for issuance (in shares) | 45,276,579 | 61,903,883 |
2014 Stock Plan [Member] | RSUs [Member] | ||
Class Of Stock [Line Items] | ||
Common stock reserved for issuance (in shares) | 2,224,138 | 3,495,540 |
2021 Equity Incentive Plan [Member] | ||
Class Of Stock [Line Items] | ||
Common stock reserved for issuance (in shares) | 33,300,077 | 32,797,245 |
2021 Equity Incentive Plan [Member] | Stock Options [Member] | ||
Class Of Stock [Line Items] | ||
Common stock reserved for issuance (in shares) | 22,500 | 22,500 |
2021 Equity Incentive Plan [Member] | RSUs [Member] | ||
Class Of Stock [Line Items] | ||
Common stock reserved for issuance (in shares) | 17,729,318 | 2,938,968 |
2021 Employee Stock Purchase Plan [Member] | ||
Class Of Stock [Line Items] | ||
Common stock reserved for issuance (in shares) | 6,493,913 | 5,162,575 |
Stockholders' Equity - Summary
Stockholders' Equity - Summary of Stock Equity Award Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Share-Based Payment Arrangement [Abstract] | ||
Shares Available for Grant, Beginning Balance | 32,797,245 | |
Shares Available for Grant, Increase in authorized shares | 13,590,094 | |
Shares Available for Grant, Stock options forfeited or expired | 4,429,063 | |
Shares Available for Grant, Repurchases of unvested common stock | 157,672 | |
Shares Available for Grant, RSUs granted | (19,504,690) | |
Shares Available for Grant, RSUs Forfeited or Cancelled | 1,830,693 | |
Shares Available for Grant, Ending Balance | 33,300,077 | 32,797,245 |
Outstanding Stock Options, Beginning Balance | 61,926,383 | |
Outstanding Stock Options, Stock options exercised | (12,198,241) | |
Outstanding Stock Options, Stock options forfeited or expired | (4,429,063) | |
Outstanding Stock Options, Ending Balance | 45,299,079 | 61,926,383 |
Outstanding Stock Options, Vested | 27,282,834 | |
Outstanding Stock Options, Vested and expected to vest | 45,299,079 | |
Weighted-Average Exercise Price, Beginning Balance | $ 6.97 | |
Weighted-Average Exercise Price, Stock options exercised | 3.54 | |
Weighted-Average Exercise Price, Stock options forfeited or expired | 8.37 | |
Weighted-Average Exercise Price, Ending Balance | 7.76 | $ 6.97 |
Weighted-Average Exercise Price, Vested | 6.09 | |
Weighted-Average Exercise Price, Vested and Expected to Vest | $ 7.76 | |
Weighted-Average Remaining Contractual Term (in years) | 6 years 11 months 26 days | 7 years 10 months 17 days |
Weighted-Average Remaining Contractual Term Vested (in years) | 6 years 6 months 29 days | |
Weighted-Average Remaining Contractual Term Vested and expected to vest (in years) | 6 years 11 months 26 days | |
Aggregate Intrinsic Value, Beginning Balance | $ 4,289,643 | |
Aggregate Intrinsic Value, Ending Balance | 657,307 | $ 4,289,643 |
Aggregate Intrinsic Value, Vested as of December 31, 2022 | 440,977 | |
Aggregate Intrinsic Value, Vested and expected to vest as of December 31, 2022 | $ 657,307 |
Stockholders' Equity - Schedule
Stockholders' Equity - Schedule of Restricted Stock Unit Activity (Details) - Restricted Stock Units (RSUs) [Member] | 12 Months Ended |
Dec. 31, 2022 $ / shares shares | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward] | |
Number of Shares, Beginning Balance | shares | 6,434,508 |
Number of Shares, RSUs granted | shares | 19,504,690 |
Number of Shares, RSUs vested | shares | (4,155,049) |
Number of Shares, RSUs forfeited or cancelled | shares | (1,830,693) |
Number of Shares, Ending Balance | shares | 19,953,456 |
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | |
Weighted-average grant date fair value, Beginning Balance (in dollars per share) | $ / shares | $ 46.01 |
Weighted-average grant date fair value, RSUs granted (in dollars per share) | $ / shares | 31.03 |
Weighted-average grant date fair value, RSUs vested (in dollars per share) | $ / shares | 38.58 |
Weighted-average grant date fair value, RSUs forfeited or cancelled (in dollars per share) | $ / shares | 42.91 |
Weighted-average grant date fair value, Ending Balance (in dollars per share) | $ / shares | $ 33.18 |
Stockholders' Equity - Schedu_2
Stockholders' Equity - Schedule of Weighted-Average Assumptions to Estimate Fair Value of Stock Options (Details) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Share-Based Payment Arrangement [Abstract] | |||
Expected term (in years) | 6 years 2 months 1 day | 6 years 2 months 1 day | |
Expected volatility | 66.30% | 68.30% | |
Risk-free interest rate | 1.10% | 0.50% | |
Expected dividend yield | 0% | 0% | 0% |
Stockholders' Equity - Schedu_3
Stockholders' Equity - Schedule of Weighted-Average Assumptions to Estimate Fair Value of Employee Stock Purchase Rights (Details) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Class of Stock [Line Items] | |||
Expected term (in years) | 6 years 2 months 1 day | 6 years 2 months 1 day | |
Risk-free interest rate | 1.10% | 0.50% | |
Expected dividend yield | 0% | 0% | 0% |
2021 Employee Stock Purchase Plan [Member] | |||
Class of Stock [Line Items] | |||
Expected volatility, minimum | 55% | 54.60% | |
Expected volatility, maximum | 82.10% | 56.70% | |
Risk-free interest rate minimum | 0.70% | ||
Risk-free interest rate maximum | 3.30% | ||
Risk-free interest rate | 0.10% | ||
Expected dividend yield | 0% | 0% | |
2021 Employee Stock Purchase Plan [Member] | Minimum [Member] | |||
Class of Stock [Line Items] | |||
Expected term (in years) | 5 months 26 days | 7 months 17 days | |
2021 Employee Stock Purchase Plan [Member] | Maximum [Member] | |||
Class of Stock [Line Items] | |||
Expected term (in years) | 1 year | 1 year 1 month 13 days |
Stockholders' Equity - Summar_2
Stockholders' Equity - Summary of stock-based compensation expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Stock-based compensation, net of amounts capitalized | $ 277,656 | $ 155,624 | $ 143,341 |
Capitalized stock-based compensation | 7,544 | 2,625 | 547 |
Total stock-based compensation | 285,200 | 158,249 | 143,888 |
Cost Of Revenue [Member] | Subscription [Member] | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Stock-based compensation, net of amounts capitalized | 23,136 | 12,571 | 2,572 |
Cost Of Revenue [Member] | Services [Member] | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Stock-based compensation, net of amounts capitalized | 9,253 | 5,418 | 1,745 |
Research and Development [Member] | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Stock-based compensation, net of amounts capitalized | 101,499 | 49,051 | 33,755 |
Sales and Marketing [Member] | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Stock-based compensation, net of amounts capitalized | 99,366 | 55,506 | 14,734 |
General and Administrative [Member] | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Stock-based compensation, net of amounts capitalized | $ 44,402 | $ 33,078 | $ 90,535 |
Income Taxes - Schedule of Comp
Income Taxes - Schedule of Components of Loss Before Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |||
Domestic | $ (461,919) | $ (347,552) | $ (234,905) |
Foreign | 15,661 | 7,925 | 4,870 |
Loss before income taxes | $ (446,258) | $ (339,627) | $ (230,035) |
Income Taxes - Schedule of Co_2
Income Taxes - Schedule of Components of Income Tax Expense (Benefit) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |||
Current state provision for (benefit from) income taxes | $ 337 | $ 251 | $ 87 |
Current foreign provision for (benefit from) income taxes | 6,193 | 1,588 | 1,041 |
Current provision for (benefit from) income taxes | 6,530 | 1,839 | 1,128 |
Deferred foreign provision for (benefit from) income taxes | (237) | 1,335 | (1,335) |
Deferred provision for (benefit from) income taxes | (237) | 1,335 | (1,335) |
Provision for (benefit from) income taxes | $ 6,293 | $ 3,174 | $ (207) |
Income Taxes - Schedule of reco
Income Taxes - Schedule of reconciliation of income tax benefit (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |||
Income tax benefit computed at federal statutory rate | $ (93,714) | $ (71,322) | $ (48,307) |
Foreign rate differential | 2,668 | 1,214 | (1,317) |
Stock-based compensation expense | (14,145) | (104,993) | 24,004 |
Change in valuation allowance | 122,724 | 192,301 | 27,446 |
Research and development credits | (11,581) | (14,483) | (2,432) |
Other | 341 | 457 | 399 |
Provision for (benefit from) income taxes | $ 6,293 | $ 3,174 | $ (207) |
Income Taxes - Schedule of co_3
Income Taxes - Schedule of components of deferred tax assets and liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Deferred tax assets: | ||
Net operating loss carryforwards | $ 324,950 | $ 277,453 |
Capitalized research and development costs | 74,824 | 0 |
Tax credit carryforwards | 46,190 | 30,777 |
Stock-based compensation expense | 26,211 | 14,885 |
Accruals and reserves | 8,005 | 6,781 |
Operating lease liabilities | 7,524 | 9,398 |
Deferred revenue | 6,065 | 4,095 |
Other | 6,021 | 3,258 |
Total deferred tax assets | 499,790 | 346,647 |
Less: Valuation allowance | (461,234) | (316,056) |
Deferred tax assets, net of valuation allowance | 38,556 | 30,591 |
Deferred tax liabilities: | ||
Deferred contract acquisition costs | (25,054) | (18,783) |
Operating lease right-of-use assets | (6,788) | (8,559) |
Property and equipment | (5,898) | (2,558) |
Other | (103) | (214) |
Total deferred tax liabilities | (37,843) | (30,114) |
Deferred Tax Assets, Net, Total | $ 713 | $ 477 |
Income Taxes - Schedule of Re_2
Income Taxes - Schedule of Reconciliation of Income Tax Benefit Activity (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |||
Beginning balance | $ 12,530 | $ 3,399 | $ 1,623 |
Gross (decrease) increase for prior year tax positions | 192 | 200 | |
Gross (decrease) increase for prior year tax positions | (859) | ||
Gross increase for current year tax positions | 7,243 | 8,939 | 1,576 |
Ending balance | $ 18,914 | $ 12,530 | $ 3,399 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Income Taxes [Line Items] | ||||
Provision for (benefit from) income taxes | $ 6,293 | $ 3,174 | $ (207) | |
Unrecognized tax benefits | 18,914 | 12,530 | 3,399 | $ 1,623 |
Valuation allowance | 461,234 | 316,056 | ||
Increase in valuation allowance | 145,100 | 242,300 | ||
Income tax interest and penalties | 0 | $ 0 | $ 0 | |
Foreign net operating loss carryforwards | 60,800 | |||
Federal [Member] | ||||
Income Taxes [Line Items] | ||||
Federal NOLs carryover | 1,283,000 | |||
Research tax credit carryforwards | 43,200 | |||
State [Member] | ||||
Income Taxes [Line Items] | ||||
Federal NOLs carryover | 689,300 | |||
Research tax credit carryforwards | $ 19,900 |
Net Loss Per Share - Schedule o
Net Loss Per Share - Schedule of Calculation of Basic and Diluted Net Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Numerator: | |||
Net loss | $ (452,551) | $ (342,801) | $ (229,828) |
Denominator: | |||
Weighted-average shares used to compute net loss per share, basic | 280,080,357 | 188,627,720 | 104,218,082 |
Weighted-average shares used to compute net loss per share, diluted | 280,080,357 | 188,627,720 | 104,218,082 |
Net loss per share, basic | $ (1.62) | $ (1.82) | $ (2.21) |
Net loss per share, diluted | $ (1.62) | $ (1.82) | $ (2.21) |
Class A and Class B [Member] | |||
Numerator: | |||
Net loss | $ (452,551) | $ (342,801) | |
Denominator: | |||
Weighted-average shares used to compute net loss per share, basic | 280,080,357 | 188,627,720 | |
Weighted-average shares used to compute net loss per share, diluted | 280,080,357 | 188,627,720 | |
Net loss per share, basic | $ (1.62) | $ (1.82) | |
Net loss per share, diluted | $ (1.62) | $ (1.82) | |
Common Stock [Member] | |||
Numerator: | |||
Net loss | $ (219,560) | ||
Denominator: | |||
Weighted-average shares used to compute net loss per share, basic | 99,562,032 | ||
Weighted-average shares used to compute net loss per share, diluted | 99,562,032 | ||
Net loss per share, basic | $ (2.21) | ||
Net loss per share, diluted | $ (2.21) | ||
Convertible Founder Stock [Member] | |||
Numerator: | |||
Net loss | $ (10,268) | ||
Denominator: | |||
Weighted-average shares used to compute net loss per share, basic | 4,656,050 | ||
Weighted-average shares used to compute net loss per share, diluted | 4,656,050 | ||
Net loss per share, basic | $ (2.21) | ||
Net loss per share, diluted | $ (2.21) |
Net Loss Per Share - Schedule_2
Net Loss Per Share - Schedule of Antidilutive Securities Excluded From Computation of Dilutied Net Loss Per Share (Details) - shares | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | |||
Antidilutive securities excluded from computation of earnings per share amount | 78,251,820 | 82,840,904 | 188,829,945 |
Redeemable Convertible Preferred Stock [Member] | |||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | |||
Antidilutive securities excluded from computation of earnings per share amount | 0 | 0 | 115,277,850 |
Stock Option [Member] | |||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | |||
Antidilutive securities excluded from computation of earnings per share amount | 45,299,079 | 61,926,383 | 71,213,150 |
Unvested Early Exercised Stock Options [Member] | |||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | |||
Antidilutive securities excluded from computation of earnings per share amount | 578,119 | 2,164,577 | 2,338,945 |
RSUs [Member] | |||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | |||
Antidilutive securities excluded from computation of earnings per share amount | 19,953,456 | 6,434,508 | 0 |
ESPP [Member] | |||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | |||
Antidilutive securities excluded from computation of earnings per share amount | 1,428,206 | 1,322,476 | 0 |
Shares Issuable Upon Conversion Of The 2027 Notes | |||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | |||
Antidilutive securities excluded from computation of earnings per share amount | 10,992,960 | 10,992,960 | 0 |
Subsequent Events - Additional
Subsequent Events - Additional Information (Details) - USD ($) $ in Millions | 1 Months Ended | ||
Jan. 17, 2023 | Jan. 31, 2023 | Dec. 31, 2022 | |
Immerok GmbH | |||
Subsequent Event [Line Items] | |||
Transaction costs associated with the acquisition | $ 1.1 | ||
Subsequent Event | 2023 Restructuring Plan | |||
Subsequent Event [Line Items] | |||
Reduction of global workforce, percentage | 8% | ||
Subsequent Event | 2023 Restructuring Plan | Maximum | |||
Subsequent Event [Line Items] | |||
Non-recurring charges | $ 31 | ||
Effect on future cash flows, amount | 17 | ||
Subsequent Event | 2023 Restructuring Plan | Minimum | |||
Subsequent Event [Line Items] | |||
Non-recurring charges | 27 | ||
Effect on future cash flows, amount | $ 14 | ||
Subsequent Event | Immerok GmbH | |||
Subsequent Event [Line Items] | |||
Consideration paid | $ 54.9 |